Technology, timing speed up payments

Published on: 
Published on 9/10/07

Recently I was asked to moderate, at an American Bar Association conference, a panel discussion on financial best practices. Not surprisingly, the best practice that all the lawyer participants agreed upon was that lawyers and law firms need to get their fees paid and into the bank quickly.

The panelists suggested three innovative best practices for doing this, and sharing them with you allows me to elaborate on each.

  • Firms are taking advantage of the new check scanners offered by some banks to more quickly and securely deposit client checks.

    Scanners treat a check virtually as a debit card, making deposit instantaneous.

    A related but more comprehensive strategy is to negotiate for a lockbox with the bank. Many banks now advertise this as one of their premier business services. In this arrangement the bank picks up remittances several times a day, records them and sends details of the transaction to you as the customer within several days.

    Modern technology now allows communicating this information on the same day as the deposit, or on the day following the deposit. This saves the time of opening the mail and processing the deposit.

  • More firms are closing their billing on the 25th day of each month to get their bills into the "first of the month" billing cycle of clients — both businesses and individuals.

    I've long been an advocate for law firms developing alternatives to diversify their receivables stream.

    Sending out invoices on or about the 25th of the month is a good example. It shortens the receivables stream because clients receive statements on or before the first day of the following month. Since most people pay their bills on or about the first of the month, a bill that comes after that is frequently kept for payment until the following month.

    Another idea is to bill one-fourth of the alphabet each week. That way the firm receives money from one-fourth of all clients weekly, rather than once per month, which evens out cash flow over the month.

  • To pressure partners to collect bills sooner, firms are using automated e-mail and other added technology features now available in many time-and-billing programs to keep the pressure on automatically.

    This is certainly good internal policy, but firms can take it further by applying technology to external client billing.

    One simple way to do this is to e-mail bills as PDF files (which cannot be modified by the recipient) rather than sending them through the mail; the speed and convenience often result in quicker payment.

    For corporate clients, consider using an electronic invoicing service. This requires substantial initial setup and coordination, and is mainly justified for larger clients. But once this is done, the billing service performs much of the routine work of certifying compliance with the client's billing rules and assigning fees and costs by matter handled and by requesting lawyer. Finally, for clients of any size, afford the ultimate convenience of paying the bill by credit card.

This Coach’s Corner Article is listed under the following categories: