It’s an unfortunate reality that law firms are writing off more work at the end of the year, even as demand for legal services bounces back from recession levels. In 2007, the average law firm brought in $.92 of every dollar invoiced. Today, that number is less than $.84 per dollar invoiced – a decrease of 9 percent on the average amount collected. But there are several steps you can take to minimize write-offs (and even increase your paying client base) heading into 2017.
- Electronic Payments
Even though electronic payments and credit cards are the default payment choice in nearly all consumer-facing industries, many law firms still don’t accept credit cards. But there’s really no excuse anymore.
Today, accepting credit cards is easy. Setup time is minimal and no equipment is required except a computer, tablet or mobile phone and an Internet connection. You don’t even need to swipe a card, and payments can be completed by your office or by your client via invoice.
2. Set Expectations
Communicating your expectations on payment up front is a crucial step on the way to minimizing write-offs. Make sure your clients know when you’d like to be paid and what happens when you aren’t paid on time.
For most law firms, that means accepting retainer payments before providing services and discontinuing services once that retainer is depleted. You should also make sure you are equipped to easily accept retainer payments via credit card, and consider setting up recurring payments for clients who continue to use your services.
3. Enable Online Payments
Even though you may only be open during business hours, your website is available 24 hours a day, and that means you should also be able to accept payments 24 hours a day. Setting up a secure online payment portal is the best way you can make sure your clients can pay you on their schedule
4. Use Electronic Billing
Be methodical about your billing. Have a written billing process in place and make sure you’re sending out invoices as soon as services are completed. The quickest (and cheapest) way to invoice your clients is via email. Make sure to include a link to a secure payment page, too, so they can pay as soon as they receive your invoice.
5. Review Unpaid Invoices
Put in place processes to review and follow up on unpaid invoices. In the legal industry, typical terms are net 30, and setting up an automatic email (with a payment link) when your client is approaching that date is an easy payment reminder. Make sure to include instructions for how to pay, including a link to an online payment page with each payment communication. Take any guesswork out of how to pay invoices, and make it as easy as possible for a client to pay. Ryan Beck