Automating law firm accounts receivables is the solution to every lawyer’s worst nightmare: the non-paying client.
Picture this: After investing countless hours into working a matter, you start the billing process and present the client with a beautiful, polished bill only to be met with silence. Now you’ve got more work to do as you send additional follow-ups to the past-due client, including phone calls, mailed statements, and, if necessary, referrals to collections.
While larger firms have the resources necessary to chase down non-paying clients, solo and small firms are at the mercy of whether their clients decide to pay or not. Non-paying clients can have disastrous effects on your productivity, realization rates, and firm cash flow.
Automating your law firm accounts receivables process will save you time and the effort needed to repeatedly follow up with multiple clients over an entire year.
What is law firm accounts receivable automation?
Law firm accounts receivables automation is the process of digitally automating your sales collection. Accounts receivable are the payments that you are yet to collect for providing your services.
Standard law firm accounts receivables processes can be time-consuming, demanding work before and after the service has been completed. More than just invoicing, you’ll need to communicate pricing expectations before entering into an agreement, track payments received and payments due and more.
The benefits of law firm accounts receivable automation
One of the biggest challenges in law firm accounts receivables processing is that the work is manual and often lacks standardization. By automating end-to-end accounts receivable operations, you could overcome these issues and more.
Spending valuable work hours on manual law firm accounts receivables processes is far from cost-effective. From credit reviews to collections, time can quickly add up. Through automation, these time-consuming processes are streamlined, leaving you and your staff with more time to focus on paying clients. Automation increases your efficiency and productivity, and takes away any extra costs such as printing that may go into manual accounts receivable methods.
Managing invoices and payments is labor-intensive work that your law firm’s staff can probably do without. In a firm that services many clients at once, these processes can take up to a few hours each day. By automating these processes, you’ll improve working efficiency and therefore your bottom line.
Improved cash flow
Your collection time will naturally improve when you move from manual processing to efficient automated accounts receivables. The end-to-end nature of automation means that invoicing, chasing up payments and everything in between happens quickly and efficiently. You also have the option of setting up scheduled payments with clients, allowing you to stabilize your cash flow.
Better customer relations
Automated law firm accounts receivables software is designed with your clients in mind. Clients receive the benefit of predictable invoicing and self-service. Friendly payment reminder email templates are available to take the stress out of collecting money. A thank you email is also automatically generated after payment to help improve relationships.
Automation simplifies the accounts receivable process as it doesn’t rely on the allocation of your time to happen. Invoicing and payment collection becomes streamlined as highly customized invoices, reminders and other communications are sent out on a predetermined schedule.
Minimized human error
Even the best accountant is privy to small mistakes, but the good news is that accounts receivables automation takes common human error out of the equation. Concerns such as inaccurate invoicing and overpayments are mitigated through digitally synced systems. The most beneficial part is that finance teams can keep track of cash flow in real-time, minimizing the risk of duplicate entries.
How to automate law firm accounts receivables
In order to automate the accounts receivable processes, you’ll need to enlist the help of a third-party vendor such as Clio integration partner, InvoiceSherpa. By outsourcing your receivables follow-up to a third-party vendor, you’re able to free up more of your valuable time making sure you’re focusing your efforts on getting paying customers rather than chasing payments.
So, what are the accounts receivable automation best practices?
Integrate Clio with InvoiceSherpa
Set up automatic triggers at specified timeframes that will follow up with customized messaging via either email, SMS, or phone based on the due date of your invoices.
Track payments in real-time
By seamlessly connecting to your existing system, InvoiceSherpa removes all double entries and reduces the manual labor required from your team. Your entire accounts receivable flow can easily be outsourced without having to change your current processes or make any technology changes to your current system.
Now that you’re on your way to automating firm accounts receivables, consider setting up your law firm’s chart of accounts.
Law firm accounts receivables software
InvoiceSherpa is a subscription-based payment automation software that helps law firms manage their accounts payable and accounts receivable. For a firm that bills many clients, programs such as InvoiceSherpa can help settle payments in a streamlined manner. Here are some of InvoiceSherpa’s key features:
- Faster payments. InvoiceSherpa helps you accelerate your cash flow by implementing reminders and even automatic late fee charges.
- Reduced strain on resources. Trim the lifecycle of invoice with end-to-end tracking. This reduces the need for follow up emails, text messages or calls.
- Simplified payments. Clients can pay directly from the invoice reminder sent out by the InvoiceSherpa system, or through your customer portal.
- Free trial. You’ll be able to try InvoiceSherpa for 14 days without entering any credit card details.
- Custom scheduled reminders. Whether it’s email or SMS, InvoiceSherpa has the capability of sending out reminders when an invoice is created, a due date is coming up, the invoice is past due, as well as a thank you when payment has been received. You can customize these reminders with your own branding.
- Integrated payments. When a client pays through the invoice reminder, payments will be posted directly to the invoice in your accounting software without you needing to double enter.
After integrating with InvoiceSherpa, Clio users are able to set up automatic triggers at specified timeframes that will follow up with customized messaging via either email, SMS, or phone based on the due date of your invoices.
For more resources, be sure to check out our accounting hub.
Final thoughts on law firm accounts receivables
A late invoice doesn’t help anyone: Stagnated cash flow is one of the main reasons a business goes broke. For example, solo practitioners may rely upon the timely processing of invoices for cash flow, which means it’s essential that outstanding payments are quickly resolved and follow-up plans are implemented.
By consistently following up with past-due clients with automated law firm accounts receivables, you can dramatically cut down both the time it takes to get paid and the number of invoices that go past due.
Note: The information in this article applies only to US practices. This post is provided for informational purposes only. It does not constitute legal, business, or tax advice.