How to Streamline Accounts Receivable
Accounts Receivable refers to all the money you expect your law firm to make in a month. Knowing this number makes it possible to create an accurate budget and predict your monthly profit—when you know your expected profit for each month, you are able to better plan your business strategy.
There are two income sources factored into your Accounts Receivable report each month: upcoming payments and past-due payments. In a perfect world, the billing process would be simple and prompt; but with the world as it is, even the best clients sometimes miss payments.
Billing Clients
Clients paying their bills is how you make your money—prompt invoicing and following up on missed payments are vital to getting paid. Below are some tips for streamlining your billing process and making your accounts receivable report as accurate as possible every month.
Prompt Invoicing
After you have rendered a service for your client, you should promptly send them an invoice. There are two main reasons for this:
Why they hired you is still fresh in their mind.
Going straight from service to payment maintains the momentum of the client-lawyer relationship.
All business is founded on quality, consistent relationships. You give your clients high-quality, prompt service; this naturally carries into your invoicing procedures.
Clear Invoicing
Every law firm should have an invoice template so the quality of their billing system is consistent for all their clients. Part of a quality invoice is clearly and concisely describing the services you are billing them for.
Clearly outlining your services also continues to build trust with your clients. If you go the extra mile to show them exactly what they are paying you for, they are more likely to trust, pay, and do business with you again.
Open Communication
Make sure your client understands that if they don’t pay their bill within a designated amount of time (for many law firms, it’s one month), there will be consequences. A set billing procedure and consistent payment reminders all help make sure your clients pay their bills. Here are some suggestions for bill reminders:
Send your client their invoice.
If they haven’t made their payment after three days of receiving the invoice, send them a reminder email.
After a week of no payment, give your client a call.
After three weeks of no payment, call your client again and send an official letter requesting payment.
At the end of the month, call them again and let them know you will not be able to continue representing them if they do not pay their bill. If they can’t pay the full amount all at once, ask if they would like to set up a payment plan.
Having a clear-cut system diminishes the uncertainty of how and when to follow up with a client behind on their payment. Your client receives dependable reminders of the upcoming deadline, and you can call and work out a solution if they aren’t able to pay.
Keep Up with Your Accounts Receivable
Estimating your accounts receivable every month ensures you are being paid for your work. It also tells you exactly where your law firm is financially. Consistently comparing your accounts receivable and payable enables you to make the best decisions about your law firm’s future and growth.
We Can Help!
Keeping track of every client’s invoice and billing status takes a great deal of time—time you could be spending with your clients, focusing on giving them the highest quality service. When you hire Brennan Bookkeeping, you regain that time.
Brennan Bookkeeping sends your clients prompt invoices and carefully writes up clear descriptions of the services they received. We also follow up with them at regular intervals to remind them of their unpaid bill.
Our service goes a step further, because we take the time to get to know the voice of your firm. Having strong relationships with your clients is important, so we make sure our interactions with them are warm and consistent.
Contact us for more details about our services, and let us help you reclaim your time!
