Whether your law firm is large or small, incorporated or boutique, implementing these simple billing practices will help ensure you spend less time on accounting and more time servicing your clients’ needs.
The right approach to client invoice management can improve your cash flow, identify challenges and allow you to work more effectively within daily time constraints. There are also significant legal and ethical obligations surrounding trust accounting, which can place a burden on you if your accounts are not clearly and transparently accurate.
These seven tips can ensure you comply with your legal accounting obligations, while helping to create a stress-free and user-friendly system of invoicing and accounts management.
1. Ensure teams follow the same unified processes
Whether you have a paper-based, digitised system of accounting or a combination of both, it’s important that everyone responsible for accounts handling in your office follows the same process to ease information input and recovery. This can include having a central archive for filing bills rendered and paid, monthly reconciliation procedures and receipting processes.
Where processes are streamlined or changed, these parties should also undergo the appropriate training required to ensure a uniform standard throughout.
2. Conduct due diligence investigations on new clients
Simple ASIC searches and asset background checks of potential new clients can be useful undertakings. They may highlight the need for additional personal guarantees and ascertain a client’s capacity to pay.
Due diligence practices can also influence your billing strategy for a particular matter, where concerns may encourage you to bill up front or via installments, rather than at the end of a matter, for example.
3. Have enough detail on your invoices
Aside from general invoice requirements, you should also include information that will assist your firm in identifying the invoice, client, matter, work completed, additional sundries and any monies deducted or received.
It also helps to include who worked on the matter and their charge-out rates so you can anticipate any future billing changes.
4. Ensure payment terms are clearly listed on invoices
Your invoices should reiterate the payment terms agreed as per your client cost agreement to ease any confusion or future problems.
Include the time period for payment, methods of payments, as well what will happen in the event of late or no payment (such as any applicable interest that may accrue).
5. Invest in practice management software
Practice management software is an ideal tool to help reduce the time spent manually maintaining client account details. You can input and retrieve data in a few steps, and best of all, all information is consistent, as accurate as possible and will reduce the risk of human error.
A practice management system is virtually a must if you have a trust account, as it enables fast, transparent and accurate review and reporting, which is essential to best practice.
6. Make payment methods easy
Today, firms are making payments easier and more accessible to clients by facilitating mobile accounting transactions in addition to traditional methods. By giving your clients various payment options, you improve your chances of receiving payment faster.
7. Review collection procedures
Despite taking all precautions, some clients just won’t pay. That’s why it’s important to institute a clear recovery process when things do not go to plan.
Keep the process consistent and documented in writing at all stages to ensure your paper trail supports your case for cost recovery in the event of non-payment. An online tracking system or software can help you identify when invoices have been outstanding for 30, 60 and 90 days, and can even help calculate the interest on those late payments.
These invoicing practices can help eradicate billing headaches and are not difficult to implement in any firm. In the long run, having a streamlined invoicing and accounting framework in place can improve your firm’s collections and help you save time and money.