Go one step further by providing Click-to-pay links or QR codes, meaning clients can pay instantaneously through Clio Payments. Therefore, you must ensure your clients receive these invoices as quickly and easily as possible to increase the likelihood of them paying promptly. Traditional methods—such as sending paper bills through the mail—are unreliable in today’s hyper-connected, digital world.

Best Practices for Accounts Receivable Collections

From there, you might escalate the frequency of telephoned requests for payment. 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. You can have them sign payment authorization forms and set up the payment plan from the get-go.

• Collection agencies may not take your past-due accounts until they're at least 60 days old.
• Since the heavy lifting is done in the backend, you can easily customize every invoice to a client’s needs in a fraction of the time.
• Interestingly, tax deductions can ease the burden when used correctly—yet not all lawyers are up-to-date on their tax deductions.
• When using manual processes or multiple pieces of disjointed software, this can be easier said than done.
• Accounts receivable are the payments that you haven’t collected from clients.
• Double entry accounting is a helpful practice for lawyers to know about, as it provides an extra guard against errors.
• 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.

Automating Firm Accounts Receivables the Simple Way

It involves a ton of inefficient, manual work—involving a lot of spreadsheets, paper invoices, inputting data entry, and struggles with collections. Whenever a client pays an invoice, you must allocate the payment to the incurred costs of a matter first. However, if a firm fails to separate revenue that covers incurred costs from actual revenue, their records will be off. By using sound bookkeeping practices to keep accurate records and consistently review the firm’s financial statements on a monthly or weekly basis, you’ll see your firm’s true financial picture. Committing to accounting for law firms will allow you to be better equipped to identify growth opportunities. https://www.bookstime.com/ Use software such as Clio Manage to help track your billable time, expenses and revenue.

What are accounts receivable for law firms?

Do not worry if you’re only getting started; here are a few strategies to help you improve the accounts receivable process at your law firm. When busy practices don’t have an effective law firm accounts receivable management process, unpaid client bills can get out of control in a hurry. However, simply throwing more manpower at the problem isn’t the answer - and frankly, unless you are law firm accounts receivable management part of a large practice that can afford a dedicated accounting team, that isn’t an option anyway. The traditional law firm accounts receivable process leaves a lot to be desired. Firms unknowingly  lower their chances of being paid on time by including only a fraction of potential payment options.

Final thoughts on improving the accounts receivable process for law firms

The client will expect this kind of follow-up since you explained your policies and procedures (and they signed off on them) during client intake. You’ll know immediately when the invoice arrives and the client opens normal balance it, so you can make bills due on receipt. This process should involve some actions on your part before calling the debt collector. That last topic—how the relationship will proceed—should include a detailed review of payment expectations and the billing process. Do that and you essentially fund the cost of the client's legal services out of your pocket.