How Accounts Receivable Is Affecting Your Bottom Line

In a perfect world, lawyers would focus on providing excellent legal work making clients happy and the world a better place. Living in a world that’s flawed, however, lawyers and their teams are also businesses.

These businesses need a lot of attention to survive and thrive, allowing lawyers to provide excellent legal work. If you ask an attorney in a small to mid-size firm what their top priority is, you aren’t likely to hear anything about legal work. That’s because the business of law is choking out law firms and when survival is at stake, our priorities change.

Law firms are fighting for breathing room. Additional revenue and streamlined processes allow a firm to operate with confidence and shift their focus toward serving clients well.

The Business Case for Prioritizing Your AR Process

While law firms must fight for every possible edge, many are bleeding money in their Accounts Receivable process.

Poor AR Process = Poor Client Experience at Crucial Touch Points

One of the best ways to succeed in business is to delight clients in their experience. That great experience leads to a better process in serving the client and also to testimonials and referrals.

According to the World Payments Report 2017, global non-cash transaction volume has increased an unprecedented 11.2% from 2014 to 2015. In mature markets like the U.S., digital payments make up 70% of total payment volumes. The vast majority of consumers are transacting online for convenience sake—it’s faster and easier for them.

Not only is it convenient for them, but it also creates a better, more enjoyable experience.

In fact, a recent study showed 71% of consumers report higher satisfaction when given the option to pay online, and 36% were less likely to switch to a competitor if sent an electronic bill instead of a paper bill.

The interaction that can make or break the client experience is often with payments. If you are providing a technology-driven, smooth experience, your client will have a positive experience and think highly of your law firm.

It’s not that by making payments easy you are guaranteed to have more referrals. But the point is, as a law firm, you take great care to provide a professional experience for your clients. And by using dated, clunky methods for payments like paper invoices and late reminders, you provide an inconsistent experience.

Cash Flow Considerations

In addition to the experience of a smooth AR process, you are also affecting the exact cash flow coming into your firm. If you are late in sending invoices and make it difficult to get paid, you are less likely to get the money, and any money you do receive is often late.

In order to grow, businesses need predictability. When you start working with a client, you need to know how much money to expect and when to expect it. Knowing the cash is coming allows you to make forward-looking decisions, like hiring staff or investing in marketing.

If you are always looking backward and waiting on payments, you are always going to be playing catch up and missing opportunities.

As a forward-looking law firm, make your AR process a priority. You can make it easy to get paid online, collect the money immediately, and create predictability in your law firm.

This may be the quickest lever to pull to add efficiency in your firm without draining your staff’s time.

At Headnote, we specialize in helping law firms excel in the entire AR process. To learn more about how we make the entire AR process for law firms simple, schedule a demo.

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