Navigating Legal and Compliance Considerations in Accounts Receivable

While the chart of accounts is customized to your law firm’s size, jurisdiction, and practice area, it typically includes five core categories in addition to numerous subcategories. Accounting for law firms lets you collect and analyze information, and make data-driven decisions based on what money comes in and leaves your firm, so it’s worth it to pay attention. Every law firm has a responsibility to stay compliant with ethics regulations, and law firm accounts receivable management your firm is no exception. Ethics rules vary in each jurisdiction, but there are definitely some basics when it comes to accounting for law firms. Insights on running a successful law firm with case management, client intake, billing and payments, tech innovation, and more. Invoicing and accounts receivable is best managed on a regular and routine basis, which is why we facilitate ongoing communication and monthly checks with all our clients.

You need to grow your business

Challenges such as increasing transaction volumes and evolving payment methods will drive the need for more adaptable and efficient systems, ensuring better debt recovery and reduced delinquencies. Hiring a partner can resolve these challenges and help businesses stay competitive by implementing accounts receivable management best practices. Imagine a manufacturing company that supplies materials to various clients. They follow best practices for accounts receivable management, sending clear and detailed invoices promptly after each transaction. They also utilize automated reminders for payment deadlines and offer various payment options, making it convenient for clients to settle dues.

Improving Your Law Firm’s Accounts Receivable Process

It’s one thing for clients to pay late, but it’s another matter entirely when they dispute a transaction. This is known as a chargeback—the client disputes their debit/credit card transaction, and their money is returned to their bank account. Attorneys are highly skilled professionals, so they shouldn’t waste their valuable time following up on outstanding bills.

Embracing digital solutions for law firm accounts receivable management

Clients can also settle payments easily through third-party payment gateways like Stripe, PayPal, Flutterwave, or Wave. Send payment requests easily in their currency of choice and receive payment in the currency of your choice. Assess the effectiveness of your AR process regularly and implement changes as needed. Stay updated on industry best practices and technological advancements. By implementing these strategies, you can transform your accounts receivable. You’ll save time, strengthen client relationships, and ensure a healthier cash flow, allowing you to focus on what you do best – practicing law.

Improved cash flow

If you are calling once monthly on accounts under 30 days late, bump it up to once weekly for accounts over 30 days late. You could also send a written notice that you’ll turn the account over to collections when it reaches 90 days past due. The best time to pitch clients on scheduling payments is during intake. You can have them sign payment authorization forms and set up the payment plan from the get-go.

• By seamlessly connecting to your existing system, InvoiceSherpa removes all double entries and reduces the manual labor required from your team.
• Accounts receivable automation is also hugely beneficial to maintaining good client relationships.
• However, simply throwing more manpower at the problem isn’t the answer – and frankly, unless you are part of a large practice that can afford a dedicated accounting team, that isn’t an option anyway.
• You might have sent an invoice to the clients detailing the due date and the amount owed, but if it remains unpaid, it constitutes a law firm’s accounts receivable.
• And you can’t do that if you’re not gathering and sorting it on a regular basis.

The Unique Challenges of Legal A/R Management

Digital payments are also easy to schedule in advance, making it easy to set up future or recurring payments. Electronic invoices also help firms save costs, by eliminating time spent on preparing bills and reducing the use of paper and stamps. Therefore, it’s perfectly reasonable when a lawyer tailors billing arrangements to fit each client’s unique circumstances. However, this can create a complex web of billing schedules and terms that can be a nightmare to keep straight. And with only inflexible, manual processes to keep track of it all, it’s not surprising when some bills fall through the cracks.

• When clients fail to pay their invoices promptly, it can create a sense of uncertainty and frustration, making it difficult for attorneys to maintain a positive working relationship.
• You might also consider automatic text or email reminders since many clients appreciate the support in remembering to pay for legal fees before late fees apply.
• Now that you’re on your way to automating firm accounts receivables, consider setting up your law firm’s chart of accounts.
• Big tech changed the game in how we run our everyday lives, so stay up to date with the latest available software solutions to keep clients happy.
• Your invoicing and accounts receivable workflow practices have a substantial impact on your internal accounting systems and are essential for understanding your profitability.
• Effective accounts receivable management is crucial for maintaining the financial well-being of businesses.

Offer Multiple Payment Options

• IOLTA accounts are designed to keep client funds separate from your typical business or operating account—where you are allowed to accrue interest.
• If this manual process isn’t streamlined, it not only adds frustration for clients but delays payments.
• Modernizing your practice’s A/R processes is essential to meeting today’s client expectations and increasing revenue.
• Clients typically appreciate what you just did for them—not what you did months ago.
• Poor accounting practices, such as struggling to track billable hours or sending out invoices late, can lead to money leakage.

Invest in practice management software with robust trust accounting features to streamline record-keeping and ensure accurate client balances. Additionally, consider establishing clear procedures for managing retainer balances, including consistent communication with clients about their remaining funds. If your client is facing financial troubles, you can https://www.bookstime.com/ further ease their burden through lawyer payment plans, where the client pays you in smaller, more manageable installments. If you’re looking to improve your law firm’s accounts receivable process, Tratta’s embedded payments feature will be advantageous. We ensure to build your client’s trust by incorporating seamless payment methods that they demand.

What is Accounts Receivable Automation?

Sadly, collecting law firm receivables may be one of the more challenging aspects of your legal career. You can put in long hours for a client, obtain a successful result, and still be left with an unpaid invoice for your trouble. Access your firm’s click-to-pay link by selecting New charge from the Online payments tab before clicking the Copy payment link. Then, paste this link in outgoing communications, add it to your website, or save it to your bookmarks to use as needed. If you’re looking to offer client-centric, secure payment options, then Clio Payments is just what you need. Generally speaking, once firms send out an invoice, they’ll usually wait until their payment due date expires before contacting a client.

Client Trust Accounting in California: A Lawyer’s Guide

• Digitslaw is a legal practice management software that offers a suite of features like legal time tracking and billing tools tailored to help you reach your law firm’s account receivable goals.
• Non-paying clients can have disastrous effects on your productivity, realization rates, and firm cash flow.
• Automated law firm accounts receivables software is designed with your clients in mind.
• So, in the legal world, accounts receivable indicates the payment clients owe the lawyers or the law firm.
• Beyond A/R management, you can expect improvements in automation, efficiency, security, and accuracy when you use digital payment options and invoicing methods.
• Receivables automation increases your efficiency and productivity, and takes away any extra costs such as printing that may go into manual accounts receivable methods.

InvoiceSherpa automates your accounts receivable with reminders and collection software. Because InvoiceSherpa integrates with Clio, you can bring contacts and invoices from Clio directly into InvoiceSherpa. Automated bill reminders enable you to automatically send outstanding balances to your clients and bill recipients based on a schedule you can customize. You’ve already put up a good fight in the court, so we know you do not want to chase down your clients for payment.