Running a law firm is not just about handling legal work; it’s also about managing the business side of things. One critical aspect of this is getting paid on time. Delayed payments can cause significant cash flow problems and even lead to the failure of your law firm. Fortunately, there are several payment hacks you can use to get paid faster. In this blog post, we will discuss 11 payment hacks that you can use to improve your law firm’s payment processing and cash flow while reducing payment delays.
Why You Need Payment Hacks for Law Firms
Getting paid on time is crucial for any business, including law firms. It ensures that the firm has a steady cash flow, which allows it to operate smoothly and grow its business. For law firms, getting paid on time is especially important because their revenue depends on the successful outcome of cases, which can sometimes take months or even years to resolve. Moreover, law firms have to deal with high overhead costs, such as rent, salaries, and other expenses, which means that cash flow is critical to their sustainability.
Late payments can cause cash flow problems that can cripple a law firm. The lack of funds can lead to missed deadlines, poor service, and lost business. In addition, chasing after late payments can be time-consuming and costly, taking away valuable time that could be spent on more productive activities, such as serving clients or growing the business. Therefore, it’s essential for law firms to take proactive steps to get paid on time and minimize the negative impact of late payments. In this blog post, we will share 11 payment hacks that can help your law firm get paid faster and more efficiently.
Challenges of Getting Paid
Getting paid on time is a major challenge for many law firms. Some of the common challenges faced by law firms include
- Late payments: Clients may delay payments for various reasons, such as financial difficulties or dissatisfaction with the services provided.
- Lack of communication: Poor communication between the law firm and the client can lead to delays in payment. Clients may not know when payment is due, or they may not understand the payment process.
- Inaccurate billing: Inaccurate billing can lead to payment delays, disputes, and even loss of clients. It is important to ensure that all bills are accurate, clear, and detailed. You can utilize automated billing software to ensure that billing is accurate to the last detail.
- Competition: Competition in the legal industry is high, and clients have many options to choose from. Law firms need to ensure that they provide high-quality services and a good client experience to retain clients and attract new ones.
- Cash flow management: Law firms need to manage their cash flow effectively to ensure that they have enough funds to cover their expenses and invest in growth. Late payments can disrupt cash flow, leading to financial difficulties.
These challenges can have a significant impact on a law firm’s finances, reputation, and ability to grow. It is important to implement effective payment strategies and best practices to ensure that the firm gets paid on time.
Payment Hacks for Law Firms: Before the Engagement
Getting paid starts before you even take on a client. Here are some tips to help ensure that you’ll get paid on time:
First, be clear on your payment terms and policies, and communicate them clearly to clients. Include payment terms in your engagement letter, and make sure clients understand your billing and payment expectations.
Consider requesting an upfront retainer before beginning any work. This can help ensure that the client is serious about engaging your services and can help you cover any initial expenses.
Perform a conflicts check before taking on a new client. This helps ensure that there are no potential conflicts of interest and that the engagement is a good fit for your firm.
Set up a system for invoicing and tracking time and expenses. This will make it easier for you to bill clients accurately and quickly.
Consider using electronic billing and payment options to make the payment process faster and more convenient for clients. This can include email invoicing, online payment portals, and electronic payment options like credit card and ACH transfers.
By following these and the tips below, you can help ensure that you start off on the right foot with clients and set the stage for prompt payment.
1. Set Clear Payment Expectations
Setting clear payment expectations before taking on a client is an essential step in getting paid on time. Clients need to know how much they will be charged and when payment is expected. Here are some tips for setting clear payment expectations:
- Use a Written Engagement Letter: Start by using a written engagement letter that outlines the scope of work, the fee structure, and the payment terms. The engagement letter should also include a section on how disputes will be handled.
- Discuss Payment Terms: Have a conversation with the client to discuss payment terms, including when invoices will be sent, how long the client has to pay the invoice, and what forms of payment are accepted.
- Get Agreement in Writing: Once you have discussed payment terms with the client, get their agreement in writing. This can be done through a signature on the engagement letter or a separate payment agreement.
- Consider Offering Payment Plans: Consider offering lawyer payment plans for clients who cannot afford to pay the full amount upfront. This can help ensure that you get paid over time and can help clients who are experiencing financial difficulties.
Setting clear payment expectations helps to avoid confusion and misunderstandings about payment terms, making it easier to get paid on time.
2. Check the Client’s Payment History
One of the most effective ways to ensure that you get paid on time is to check your client’s payment history. By reviewing your client’s payment history, you can determine whether they have a track record of paying bills on time or whether they have a history of paying late or not at all.
You can start by performing a credit check on your clients to get a sense of their overall creditworthiness. This can help you understand how likely they are to pay their bills on time. Additionally, you can review their payment history with your firm or with other firms that they have worked with in the past.
If you find that a client has a history of paying late, you may want to consider requiring a retainer before starting work on their case. You can also set up payment reminders or request that they pay invoices in installments to help mitigate the risk of late payments.
In some cases, you may decide that it is not worth the risk to work with a client who has a poor payment history. While this may be a difficult decision to make, it is important to remember that your time and resources are valuable, and it may be better to focus your efforts on clients who are more likely to pay their bills on time.
3. Use Legal Practice Management Software
Using legal practice management software is a smart way to keep track of billing and invoicing. These software solutions make it easy for lawyers to create and send invoices, as well as track payments and outstanding balances. The software can also send automatic reminders to clients when payments are due, helping to reduce late payments. Some software also allows for online payments, which can make your law firm’s payment process faster and more convenient for clients.
Another benefit of using legal practice management software is that it can help lawyers track their time more accurately. This is important because inaccurate time tracking can result in underbilling, which can be detrimental to the law firm’s bottom line. By using software to track time, lawyers can ensure they are accurately capturing all of their billable hours.
Overall, using legal practice management software can help law firms streamline their billing processes and improve their cash flow. It can also reduce the time and effort required for billing, freeing up more time for lawyers to focus on their legal work.
4. Accept Multiple Forms of Payment
Offering your clients different payment options can increase your chances of getting paid faster. Providing clients with multiple payment options will give them more flexibility, and they’ll be more likely to pay you in a way that’s most convenient for them. Some of the payment options you can consider include:
- Credit card payments – This is one of the most popular payment options clients use because it’s fast and easy. You can use a law firm payment processing platform like RunSensible to accept credit card payments and PayPal as well.
- ACH payments – ACH payments, also known as electronic checks, are another popular payment option. They allow clients to transfer funds from their bank accounts to yours quickly and easily.
- Mobile payments – With the rise of mobile payment apps like Venmo and Zelle, many clients prefer to pay through their mobile devices.
- Online payment portals – Using an online payment portal allows clients to pay their bills directly on your law firm’s website.
- Lawyer Payment plans – Offering payment plans can be an effective way to get paid faster. You can set up a payment plan with a client to pay their bill in installments over a set period of time.
By accepting multiple forms of payment, you’ll be able to accommodate a broader range of clients and increase the likelihood of getting paid on time. Additionally, legal practice management software can help streamline your law firm’s payment process and allow clients to pay their bills online.
5. Monitor Invoicing and Follow Up
Regularly Review Invoices: It’s essential to keep an eye on your invoicing to ensure there are no errors or discrepancies. Reviewing your invoices regularly also helps you stay on top of your finances.
Send Invoices Promptly: Once you complete the work, send the invoice as soon as possible. Prompt invoicing is key to getting paid faster.
Include Payment Terms on Invoices: Make sure to include payment terms on your invoices, including the due date and late fees. This ensures that your clients are aware of the payment expectations.
Set Up Automated Reminders: Automated reminders can help ensure that clients remember to pay their bills. Set up reminders before and after the due date to encourage prompt payment.
Personalize Follow-Up Communications: Personalizing follow-up communications can help build relationships with clients and encourage prompt payment. Consider following up by phone or email to discuss payment arrangements.
Provide a Clear Statement of Account: Providing a clear statement of account can help clients understand their outstanding balance and any charges or fees associated with late payments.
Offer Payment Plans for Legal Services: Offering lawyer payment plans can help clients pay off their bills over time, reducing the risk of non-payment.
Escalate Late Payment: If a client continues to ignore payment requests, consider escalating the issue to a collections agency or taking legal action.
By monitoring invoicing and following up promptly and professionally, law firms can increase the likelihood of getting paid on time and reduce the amount of time and resources spent on collection efforts.
Payment Hacks for Law Firms: During the Engagement
Once you’ve started working with a client, there are still several steps you can take to ensure timely payment. Here are some payment hacks to consider during the engagement:
6. Request a Retainer or Deposit
Requesting a retainer or deposit upfront can help ensure that you get paid for your work. You can use the retainer to cover expenses or as a down payment for future work. Make sure that the retainer is clearly outlined in your engagement agreement, and that the client understands how it will be used.
7. Send Invoices Regularly
Regular invoicing is key to getting paid on time. Depending on your billing schedule, you may want to send invoices weekly, bi-weekly, or monthly. Make sure that your invoices are detailed and easy to understand, with a clear breakdown of services provided, time spent, and expenses incurred.
8. Offer Payment Plans
Offering payment plans for clients can be a good option for clients who may not be able to pay the full amount upfront. Consider offering a payment plan that works for both you and the client. For example, you could split the payment into two or three installments, with the final payment due upon completion of the work. Having specific payment plans not only benefits you, but is also helpful to your clients.
9. Send Payment Reminders
Sometimes clients may simply forget to pay their bills. Sending friendly payment reminders can help prompt them to make payments. You can set up automatic payment reminders in your legal practice management software or use email templates to make the process easier.
10. Address Payment Delays Promptly
If a payment is delayed, address the issue promptly. Reach out to the client and inquire about the delay. You may be able to resolve the issue quickly, such as by providing additional information or documentation. If the client is unable to pay, you may need to consider other options, such as a payment plan or legal action.
11. Consider Offering Discounts for Early Payment
Offering a discount for early payment can provide an incentive for clients to pay their bills promptly. For example, you could offer a 2-5% discount for payments made within 10 days of the invoice date.
12. Use E-billing and Online Payment Platforms
Using e-billing and online payment platforms can make law firm payment processing easier. You can set up online payment options through RunSensible, the all-in-one legal practice management software that sets up a branded payment gateway for your clients to pay via third-party payment processors such as PayPal, Stripe, or Square. These platforms make it easy for clients to pay their bills online, reducing the likelihood of delays.
13. Provide Detailed Invoices
When sending an invoice, make sure it’s clear and detailed. Include a description of the services provided, the fees charged, and any expenses incurred. Providing detailed invoices can help reduce confusion and disputes over billing, which can delay payments.
14. Send Invoices on Time
Sending invoices on time is critical to ensuring timely payments. Set a clear billing schedule, and stick to it. If possible, consider sending invoices as soon as services are rendered, rather than waiting until the end of the engagement. This can help ensure that payments are received promptly.
15. Use Automated Reminders
Automated reminders can be an effective way to ensure that clients are aware of upcoming payments. Many legal practice management software offer automated billing and reminder features, allowing you to set up customized reminders for each client.
Sending email or SMS reminders is made possible with Runsensible’s automation feature.
16. Discuss Payment Issues Early On
If a client is experiencing financial difficulties or is having trouble paying their bills, it’s important to address the issue as soon as possible. Discussing payment issues early on can help you work out a mutually acceptable solution that avoids costly disputes and delays in payment.
17. Monitor Accounts Receivable
Regularly monitoring your accounts receivable can help you identify and address any overdue payments. Consider setting up a system to track payments and follow up with clients who are past due. With Runsensible’s integrated accounting software, Quickbooks, you can make sure that all your accounts receivable are under your direct supervision.
By taking these steps, you can help ensure that payments are received promptly and reduce the likelihood of disputes over billing.
Payment Hacks for Law Firms: After the Engagement
Just because a matter has been completed doesn’t mean the law firm process is over. There are still steps that law firms can take to ensure they get paid promptly and in full.
18. Send a Final Invoice
Once the matter has been resolved, send the client a final invoice that details all the work done, including any additional expenses incurred. Be sure to include a due date for payment.
19. Follow Up
Don’t be afraid to follow up on late payments. Send reminders, make phone calls, and send emails to remind clients of the outstanding balance.
20. Provide Payment Plan Options
If a client is struggling to pay the full balance, consider offering payment plan options. This can help alleviate any financial strain the client may be experiencing and can increase the likelihood of receiving payment.
21. Consider Offering Discounts
Offering a discount for prompt payment can be an effective way to incentivize clients to pay their balance quickly.
22. Collections Agency
If all else fails, consider turning over the account to a collections agency. While this should be a last resort, it can be an effective way to recover funds owed.
By following these steps, law firms can increase their chances of getting paid promptly and in full, even after a matter has been completed.
Remember to Maintain Good Client Relationships
Foster Positive Client Relationships: Building a strong relationship with your clients can go a long way towards ensuring timely payments. Communicate regularly, provide updates on the case, and address any concerns or questions your clients may have promptly.
Set Up Automatic Payment Reminders: Setting up automatic payment reminders can help ensure that your clients don’t forget about outstanding invoices. This can be done through your legal practice management software or by using a third-party app.
Offer Payment Plans: Some clients may struggle to pay a large lump sum all at once. Offering payment plans can help make it more manageable for them to pay off their invoices in smaller increments over time.
Provide Detailed Invoices: Providing clear, detailed invoices can help avoid confusion and reduce the likelihood of disputes over payments. Include a breakdown of fees and services provided, as well as any expenses incurred.
Follow Up on Late Payments: If a client’s payment is late, it’s important to follow up promptly to resolve the issue. This can be done through phone calls, emails, or even letters.
Address Payment Issues Head-On: If there are ongoing payment issues with a client, it’s important to address them head-on. This could involve discussing alternative payment arrangements or even terminating the engagement if necessary.
Conduct Regular Client Reviews: Conducting regular reviews of your client relationships can help identify any potential issues with payment before they become major problems. Use the feedback received to improve your billing and payment processes moving forward.
Remember, your clients are the lifeblood of your law firm. By prioritizing positive client relationships and implementing effective payment strategies, you can increase the likelihood of timely payments and build a loyal client base.
Improve Your Payment Processing and Billing the Right Way
Getting paid on time is crucial for the financial stability and growth of your law firm. By following the payment hacks discussed in this article, you can increase your chances of getting paid faster and more consistently. Set clear payment expectations, check the client’s payment history, use legal practice management software, accept multiple forms of payment, and monitor invoicing and follow-up.
At RunSensible, we understand the challenges that come with billing and payment processing for law firms. That’s why our legal practice management software comes equipped with billing and payment processing features to help simplify the payment process for you and your clients. With RunSensible, you can easily generate and send invoices, accept online payments, and track payment history.
Don’t let payment processing be a burden on your law firm. Try RunSensible’s billing and payment processing features today and experience the convenience of getting paid faster and more efficiently.
FAQ
1.Do lawyers have payment plans?
Of course! All law firms and legal practitioners provide some form of payment plan to make payment easier for their clients. You should also consider offering payment plans since they mean faster payment and better cash flow.
2.What is a Law Firm Payment Processing Software?
Law firm payment processing software platforms like RunSensible are convenient tools that let law firms accept credit cards and PayPal payments via a seamless and branded gateway connecting the client to services like Square, Stripe, or PayPal.
3.Are there any tools to improve payment for lawyers?
Yes, there are actually a lot of different tools that make law firm payment processing much easier. Using legal software platforms, lawyers can set up and track billing and payment processing, send automatic notifications, and provide a branded payment gateway for their clients.
Disclaimer: The content provided on this blog is for informational purposes only and does not constitute legal, financial, or professional advice.
