Category: Bookkeeping

Next, let’s see how you can supercharge your accounts receivable management with exciting digital solutions. With so many ways to pay digitally, it can be hard to know which one is right for your clients. That’s why legal payment solutions, like LawPay, provide firms with a variety of flexible options to accept payments, including eCheck, credit card, and other digital payment methods. Maintaining good client relationships is a top priority for any attorney. Calling clients for payment follow-ups, sending snail mail, and other manual A/R processes can create a lot of unwelcome stress and tension.

• Both general accounting and trust accounting are necessary for your firm’s success—and integrations seamlessly tie the two areas together.
• Each of these actions build client confidence and improve your collection rate.
• Accounting for law firms lets you collect and analyze information, and make data-driven decisions based on what money comes in and leaves your firm, so it’s worth it to pay attention.
• With Clio Manage handling your cases and Clio Accounting managing your financials, you can streamline operations and minimize manual entry errors–enhancing your firm’s performance from intake to payment.
• Rocket Matter is part of ProfitSolv, a collection of best-in-class software solutions for professional services firms, allowing the freedom for growth and innovation.
• First, you must make it as easy and attractive as possible for clients to pay.

Best Practices for Improving Law Firm’s Accounts Receivable Process

You can then compile all your unbilled time and generate a professional looking invoice within the same system with just a few clicks. Billing software built for https://www.bookstime.com/ lawyers also minimizes the time you spend on non-billable tasks and ensures compliant handling of trust accounts. This is accounting and bookkeeping 101, of course, but those two options are counterproductive financially. Collection agencies may not take your past-due accounts until they’re at least 60 days old.

• Once you understand the basics, consider hiring an accountant, either as a contractor or as an employee.
• In such cases, providing alternate payment methods will prompt clients to repay.
• You don’t have to outline your time to the minute, but you should separate larger tasks and include a summary of each.
• Therefore, law firms must develop effective accounts receivable processes.
• If you want your firm to stay compliant, be financially successful, and grow, you need to have an accurate and clear bookkeeping system for your law firm to follow.
• Reviewing financial reports is essential to managing receivables, but read beyond the numbers and use the reports to understand clients’ stories and the relationships behind the numbers.

Accounting Basics for Lawyers

While this primarily applies to new law firms, ensuring that the basics are determined and set up correctly is critical. Double-entry accounting is a system of bookkeeping where every entry to an account (i.e., every financial transaction) requires a corresponding and opposite entry to a different account. A double entry system, therefore, has two equal and corresponding sides—or debits and credits—and creates a balance sheet consisting of assets, liabilities, and equity. By seamlessly connecting to your existing system, InvoiceSherpa removes all double entries and reduces the manual labor required from your team.

Maintaining Client Relationships

That’s why our platform makes it easy for your law firm to accept ACH payments, eChecks, credit cards, and financing plans, all through our secure payment portal. With LawPay, our sister company under AffiniPay, your firm can accept debit and credit cards, eChecks, and electronic payments while complying with ABA and IOLTA guidelines. LawPay serves more than 55,000 law firms around the U.S. and integrates seamlessly with MyCase. This makes accounts receivable management accessible for firms of all sizes, including solo practitioners and small and medium teams.

It’s normal to have hiccups when implementing AR automation, but these can be ironed out. It’s worth putting the time in early to make sure everything is set up and tested properly. You can go with an accrual or cash accounting method in the US, and the difference is mostly about timing. With Clio Accounting you can generate all sorts of financial reports to help you make data-driven decisions for the growth of your firm. When it comes to key accounting concepts, it’s really about organization. They’ll give you and your work greater value, and they’ll make you a higher priority.

• If you have A/R staff, they should not be focused on keeping the attorneys happy by providing copies of bills and reports.
• But sometimes, after all that hard work, you send out the bill and get no response.
• Look into the pros and cons of both methods for your firm, then be consistent going forward to ensure your records are accurate and easy to track.
• Diana spent eight years as the Marketing Director for the Institute for Divorce Financial Analysts® (IDFA®), and she has been a Certified Divorce Financial Analyst® since 2006.
• Our A/R software automates recurring payments, cutting down on manual follow-ups and speeding up cash flow.

Plus, with our Smart Time Finder, your firm can capture billable time you may have missed via a passive time-tracking feature. MyCase passively tracks activities done in the platform to ensure you’ve tracked time for all billable work. With MyCase time-tracking software, you can keep track of billable or non-billable time spent—for flat fee and pro bono cases. You’ll be able to start and stop timers as you work, so you don’t have to recall time retroactively—improving your team’s utilization rate. Now that you’ve made a great first impression, it’s important to maintain that level of service by keeping clients up-to-date on their case, billing, and account status. Calculating your collection rate for the past year can give you an idea of how your law firm is performing.

• With so many ways to pay digitally, it can be hard to know which one is right for your clients.
• While it can seem daunting, there are strategies to prevent this from happening.
• Effective accounts receivable management is crucial for law firms aiming to maintain a healthy cash flow and strong client relationships.
• By implementing these strategies, you’ll expedite payments, increase your firm’s bottom line, and reclaim valuable time for practising law.
• This can cause serious issues and stunt your firm’s growth (more on that later).
• Convenient features like Quick Bill and Scheduled Payments help firms collect more payments while ensuring that money goes into either the correct trust or operating account automatically.
• This allows the firm to maintain a steady cash flow and the entire team to focus more on delivering high-quality legal services to clients.

Additionally, relying on manual interventions from their staff to remind clients of owing balances can quickly become an administrative time suck. Leveraging Rocket Matter Pay law firm accounts receivable management within your billing system empowers both your firm and your clients. This secure online payment portal simplifies the collection process by offering clients a convenient way to pay invoices with credit cards, debit cards, or e-checks. Additionally, Rocket Matter Pay boasts features like automatic deposits within 12 business hours and the ability to store client payment information securely for future transactions. Finally, the real-time payment data provided by Rocket Matter Pay offers valuable financial insights, allowing you to track collection trends and analyze cash flow. Law firm accounts receivable is the money clients owe after a law firm delivers legal services.

Setting the Foundations: Accounts Receivable Management for Law Firms

A thank you email is also automatically generated after payment to help improve relationships. As for businesses in other industries, standard law firm accounts receivables processes can be time-consuming, demanding work before and after the retained earnings balance sheet service has been completed. More than just invoicing, you’ll need to communicate pricing expectations before entering into an agreement, track payments received and payments due, and more. Sending reminders to one client about pending payments may not seem inconvenient, but think about manually tracking tens or hundreds of them and giving a slight nudge about owing balances. That’s why you need a well-organized law firm accounts receivable process.