In the life cycle of a legal matter, the time between invoicing and client payment is crucial to the profitability of a law firm. Billing delays and unpaid invoices not only cost money but also valuable time.
Many attorneys have no clue what their firm’s invoice to payment processing time actually looks like… let alone where it should be… but this information is vital to assessing the efficiency of firm procedures and handling the billing to payment process in the most effective manner.
Your Law Firm’s Invoice Processing Time
First, law firm leaders need to review the amount of time it takes their firm to complete the invoicing process. This is done by calculating the time between the day staff members start creating invoices and when the invoice actually gets sent to the client. For most law firms, the invoicing process falls somewhere on this spectrum:
- More than two weeks
- One to two weeks
- Less than a week
- Less than three days
Law firm leaders can learn a lot from doing this simple review. For solo attorneys, who spend so much of their time on client matters, invoicing can be a time-consuming annoyance. They get so caught up in their client responsibilities that they consistently procrastinate when it comes to billing, which leads to late bills, client dissatisfaction, and potential nonpayment.
Small and medium-firm leaders may not realize how much time staff members spend on the invoicing process. These delays may stem from insufficient time tracking practices on the part of timekeepers, or inadequate tools to structure the invoicing process. Staff members may not inform leaders of these problems, continuing to work inefficiently instead.
The longer the invoicing process, the less efficient the law firm procedures. Invoicing should not take multiple days and weeks to complete. These delays can cause a variety of issues:
- Clients want to be kept updated about their matters. Delayed bills often go hand-in-hand with inadequate communications.
- Excessive time spent on the invoicing process takes away billable hours from timekeepers.
- Excessive time spent on the invoicing process keeps support staff from handling other important tasks within the firm.
- Delayed invoices may mean that clients receive larger bills than they would get with more consistent billing cycles. These large amounts may make clients uncomfortable and unwilling to make timely payments.
In addition to reviewing their invoice processing time, law firms should also review their payment processing times. This is the average time that it takes for clients to pay their invoices. Some indications of payment problems include:
- Consistent late payments from a number of clients
- Routine receipt of partial payments that leave an invoice balance
- An abundance of unpaid, overdue invoices
Strategies to Decrease the Invoice to Payment Processing Time
Law firms experiencing unreasonably long invoice to payment processing times need to implement procedures that minimize delays to promote timely invoicing and quicker payments. Here are six strategies that law firm leaders can use to take their invoice to payment times from prolonged to streamlined.
- Create a Standard Process
The law firm invoicing process should not vary from staff member to staff member or month to month. Law firms need a standard process that all timekeepers and billing staff know and understand. When these individuals have to waste time figuring out procedures, they are also wasting law firm revenue. Leaders need to establish detailed invoicing instructions for firm members to follow each and every time they sit down to create bills.
Timekeepers should be time tracking as they work instead of waiting to track weekly or monthly. Accurate and timely timekeeping is the first step to a standardized process that promotes profitability.
- Frequent and Consistent Bills
As mentioned above, clients balk at erratic bills with large billing amounts. They prefer smaller bills with predictable payment obligations. To meet these expectations, attorneys should send bills frequently and consistently. By billing on a weekly, bi-weekly, or monthly basis, law firms can enhance the attorney-client relationship, while also benefitting the practice with a more predictable cash flow into the firm.
- Accept Online Payments
E-billing and payments have become a standard within the legal community. With these features, clients can view their bills online and immediately make payment without worrying about writing a check or coming into the law office. Law firms that do not offer these options to their clients miss out on a valuable opportunity for faster and complete compensation.
- Automate the Collection Process
Trying to collect overdue invoices can be time-consuming and unnerving. Some lawyers hate it so much that they would rather write off unpaid debts than pursue payment.
With an automated collection process, law firms can streamline the process and make it much less objectionable. Automated email reminders serve the same purpose as an uncomfortable telephone call, without the awkwardness – and when preset for automated sending, they also free up valuable firm time. With the right billing platform, firms can send clients friendly, but firm, reminders while preserving the relationship.
- Detailed and Clear Invoices
Clients are more willing to pay invoices that they agree with and understand. They do not want to see overly general bills, nor do they want paragraphs upon paragraphs of explanation. Law firms need to create invoices that articulate tasks completed on the matter with language that does not confuse the client or make them hesitant to make payment. Clear and concise bills result in a few questions and objections because the clients trust what is being presented to them in the bill.
- Implement Technology
The right legal billing system is key to minimizing the law firm invoice to payment processing time. TimeSolv legal time tracking and billing software offers all of the tools that attorneys need for efficient and profitable invoice and payment procedures. From remote time tracking to automated payment reminders, TimeSolv is there to help streamline the entire process.
About Erika Winston:
Erika Winston is a freelance writer with a passion for law. Through her business, Personal Touch Edits, she helps legal professionals deliver effective written messages. Erika is a regular contributor to TimeSolv and a variety of other publications.