Many family law firms do not know their collection rate; add that to a pandemic and you have a recipe for reduced profits. Here’s how to reduce your Accounts Receivable to zero this year.
By Scott Clasen, Marketing Director
COVID-19 turned 2020 upside down for every type of business, and family lawyers are no exception. In fact, you may find business is booming during these times. But your process on managing and collecting payment may have been forced to change while living through a move to remote offices.
Even before the pandemic, law firms had a problem with their Accounts Receivable (AR). According to Clio’s 2020 Legal Trends Report, law firm collection rates averaged 88% in 2019. Our own surveys revealed that far too many firms do not know their collection rate – and that’s a problem.
Fortunately, TimeSolv has developed a cutting-edge feature that allows you to receive payment on hundreds of invoices in seconds, making it easier for you to receive payment and reduce your AR to zero.
Decreasing Accounts Receivable and Increasing Profits
Let’s look at what the average law firm could do to decrease AR and increase profits this year.
- Accept electronic payments. 65% of customers prefer to pay electronically, so you must be taking credit cards and eCheck/ACH
- Email invoices as well as physically mailing them. The faster your clients receive an invoice, the faster they can pay
- Send invoices in a timely manner. Law firms that see collection rates over 95% often invoice twice a
- Set the right payment. Is your firm on a Net 30 payment schedule? And if so, why? “Because that’s the way we’ve always done it,” is not a good reason to continue this practice.
3 Steps to Achieve Zero AR
Here are three simple steps to achieving zero AR and a collection rate close to 100%.
- Establish an invoicing and payment policy during client intake that clearly states when payment is expected. Part of this policy should be requesting payment information upfront; this means storing credit card or eCheck/ACH information within your invoicing software. With TimeSolv’s integration with LexCharge and LawPay, you can safely store that information within your client and matter data in TimeSolv.
- With your client’s payment information, you can dictate when payment is received. Your payment policy should stipulate that you will run payments a certain number of days after sending an invoice, allowing your client time to review and raise questions on the bill. Check with your Bar Association to see if they have established a protocol on the number of days between invoicing and running payments.
- Use TimeSolv to select all invoices that have come due and, with a single click, run payments through either LexCharge or LawPay. In seconds, you will have collected payment on every single invoice sent that month.
2021 Can be Your Year of Zero AR
This is a profoundly different way of thinking about how to get paid. Imagine no longer having to wait and hope that your client will pay your invoice in a timely manner. Now you dictate exactly when you will receive funds, making cash flow predictable and increasing your collection rate to nearly 100%.
Scott Clasen oversees all aspects of TimeSolv’s marketing efforts. To learn more about automating your law firm tasks with TimeSolv, click here for a free trial: www.timesolv.com/start-now
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