Tips to Help Attorneys with Large Amounts of Open Accounts Receivable
Many lawyers are in the position of having a significant amount of open accounts receivable. This was eye opening to me. How does this happen in these law firms?
- 1They may have had to take on the responsibility of a partner who left the practice and there is no one at the firm who can focus on it.
- 2They may be one of a handful of attorneys at the firm who take care of the billing and collections on a day-to-day basis.
- 3The attorney may have a busy practice and be able to only focus on accounts receivable a few hours each month.
Regardless of the reasons, most attorneys have to deal with a lot of accounts receivable in their practice. Oftentimes, this can be practice area specific, as some firms product much more invoicing than others. The three main types of practice areas I see this is immigration law, family law and collection type law practices.
Here are some tips to help attorneys with open accounts receivable:
Are you an Attorney who spends too much of your time chasing down balances due?
Outsourcing the accounting or outsourcing collections may be the way to fix the issue. It is often difficult to collect on really old, outstanding balances. Anything in the over 90-day column is just stale and more difficult to collect. It is typically one of the first areas we assist when onboarding a new client. There is automation right inside our accounting platform, QuickBooks Online Advanced. It is called workflows and you can really tweak it to work exactly how each firm needs it handled.
Use the tools in the accounting platform
QuickBooks Online Advanced is by far the best software to run your law practice. There are workflows, automation, AI, advanced reporting all-inclusive in this product. With the workflow for accounts receivable in place, the program will send out a reminder notice when the invoice is due and a late notice when it is past due. You have the flexibility to fine tune the software as well. Click here for THE BEST pricing on QuickBooks Online Advanced.
Why is there so much in over 90 day column?
Stale accounts receivable can become open accounts receivable when the right methods are in place. What are the common reasons for old and stale accounts receivable (ie, over 90 day category)?
How do you rectify a firm with large amounts of stale, old, outstanding Accounts Receivable?
We recommend adding the ability for the client to pay by credit card. The collection rates are staggering once you implement this payment method. 39% improvement in collecting on your fees. Often times when we recommend this to a client, we get some resistance from the partners not wanting to pay the merchant account fees. Or they are concerned about payments by credit card with trust accounting. Did you know there is a software that solves both of these problems? Gravity legal does that and much more! One of my favorite parts of this software is the ability to handle evergreen retainers, split payments to trust and accounts receivable, it is fast, clear and straightforward to the end user, the law firm's client. Plus, it integrates with my favorite legal software, LeanLaw. With just a single click, you can trust request through gravity payments. Fast and simple! It will save Admin time too. Want to learn more about this fabulous add-on? Contact me!
The outsourced accounting firm can be invaluable in collecting on the stale accounts. This takes the task off the hands of the staff and brings it to a place that makes more sense. We would have no contact with the law firm client other than for collecting. We can handle tracking and following up when a client doesn't pay you. With QuickBooks Online Advanced, we can make a dropdown style custom filed to track the follow up calls and whether the delinquent account should move on to collections.
We have a wonderful collections firm that we have partnered with that can handle the delicate nature of collecting on old debt. It is professional and specializes in working with law firms. To find out more, reach out!
We hope you enjoyed our article on how to fix outstanding balances for your law firm. With this knowledge, we know that you can increase your cash flow by getting more of your outstanding accounts receivable paid. So what are you waiting for?
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