Three law firm billing strategies to increase payment realization in 2023
Lawyers face incredible pressure to bill hours. Even when lawyers successfully reach billable goals, lagging billing processes and unaccepted invoices can inadvertently devalue the firm’s work. Moreover, many worry that law firms will endure a soft market in 2023, putting even more pressure to bill and effectively manage accounts receivable (AR).
Here are three law firm billing strategies to improve billing cycles and payment realization for increased profits in 2023.
Focus on billing accuracy
Billing accuracy is crucial. Clients don’t have patience for errors from their legal providers, and collections suffer if bills are not processed correctly and timely.
Direct communication between attorneys and client account managers is key to resolving unpaid invoices. Client account managers should work directly with attorneys to remove confusion and unnecessary back-and-forth, which improves both the attorney and client experience. Additionally, invoices themselves should be clear and concise to ensure client understanding.
Firms should closely monitor and analyze billing rejections to determine trends or root causes leading to rejections. Correcting and resubmitting invoices takes time and money away from the firm, so addressing issues proactively is vital.
Firms should keep up-to-date rosters of personnel and their offices/locations, etc. so client account managers and others can identify their internal contacts.
Streamline billing to quicken the cash cycle
The first way to get paid faster is to adopt email delivery of billing. With the recent trend of US Post Office unreliability and increased remote work, mailing invoices to client offices causes unnecessary delays. Clients also typically prefer to pay via credit card or through an online portal. These portals are more secure than mailing checks, and law firms receive payment nearly instantaneously. Frontline offers proprietary software to assess firms’ billing processes and analyzes opportunities to create efficiencies that improve the cash cycle.
Manage AR on a quarterly basis
Many firms reserve collections for fourth quarter, or even wait until the last few weeks of the year. Managing billing and AR on a continuous basis has major advantages over a single, year-end push: AR health is improved, more invoices are collected timely, dealmaking is reduced, and write-offs decrease.
Furthermore, the longer an invoice sits unpaid, the less likely the payment will be made. Sending invoice follow-ups sooner will increase the firm’s revenue realization. Frontline’s A/R Managed Service clients have found success in adjusting follow-up schedules from 60 days to 45 days. These 15 days can make a huge difference in the course of a year.
Finally, accounting system conversions tend to delay billing. Plan your budget accordingly if your firm is converting. The amount of time it takes to get billing up to speed varies by firm, and for some, it can be months to relieve the billing backlog after a conversion.
In addition to reviewing AR with attorneys, firms should review all unapplied cash and trust dollars to apply these funds well in advance of year-end.
Frontline Managed Services provides white-glove solutions to accurately assess firms’ needs and implement lasting AR and billing solutions. Our tested methodology, experience, and unique approach take the guesswork out of invoice management, from submission to approval and payment.
To learn more about law firm billing strategies to increase payment realization in 2023, watch Frontline webinar “Looking Ahead While Looking Back: Best Practices” : https://frontlinems.com/webinars/ar-best-practices-road-map-2023/