Charges and charges can happen for many reasons, including inefficient resources, poor billing practices, or unexpected delays. While these discounts are sometimes unavoidable, they should primarily be associated with flat fees or individual discounts — not a significant portion of the company’s total billing. The best way to reduce write-offs and write-offs is with a streamlined, standardized process that uses legal billing software to ensure transparency for the customer and efficiency for the business.
The benefits of legal billing software
1. Track time for accurate billing
Many lawyers use manual timekeeping methods, which often leads to errors or lost time. Lawyers who miss a day — or more — may end up forgetting the time spent on a case and may not be able to provide full billing details. This timekeeping method is prone to human error and can pave the way for disputes with customers due to discrepancies in their bill.
Law practice software with time-tracking features can track the time you spend on a client’s case, complete with notes that ensure the client has a clear idea of what you’ve spent the time on and why it’s relevant to the case. Every entry is accurate and detailed so nothing is missed.
2. Automates the legal billing process
There are countless automation solutions out there, but not all of them are designed for the specific needs of law firms. With law practice management solutions and built-in time tracking, attorneys can spend time on clients and internal meetings, rather than mundane tasks like manually keeping track of time.
Law practice management software offers billing features such as:
Time and expense tracking
Built-in payment processing
IOLTA and ABA compliance
A customer portal with automated reminders, mobile transactions and customizable payment plans
3. Billing and reporting
Write-offs and write-offs are more likely if a law firm doesn’t keep track of finances and outstanding balances, payments, and income. Law firm management solutions with robust reporting capabilities enable attorneys and businesses to carefully monitor financial health and streamline billing processes.
This can be done with functions such as:
Some of the specific reports that law firms can generate include accounts receivable, billing history, summaries of business balances, bill payments, and earnings.
What is the difference between a debit from a legal invoice and a debit?
A write-down is an adjustment to the existing inventory, which reduces the total value. However, the asset still retains some value. Depreciation is disclosed in the income statement to reflect the impact of devalued assets, but large depreciation reduces equity.
A depreciation essentially states that the asset no longer serves a purpose and has no future value. Bad debts can be a write-off if a customer purchases a product or service on credit and defaults on it. The accounts on the balance sheet are written off by the amount of the bad debts, which reduces the total accounts receivable balance.
Why do lawyers write off a client invoice?
Law firms both large and small can write off time for a number of reasons, such as associate time, partner time, or practice group time. Some of these are:
Non-billable time for employee training
Customers push back against rate hikes
Unforeseen delays on the part of the company that should not be charged to the customer
Preventive discounts, which occur when lawyers feel they are charging too much
Scope of work exceeds budget without prior consultation with client
Employees spend too much time on a case, leading to unjustified billable hours
Some of these situations are unavoidable, but others are the result of an inefficient and unclear billing process. Law firms can reduce write-offs and write-offs with a streamlined billing process with clear client communications that minimize disputes, defaults, and pushback.
Create a legal billing policy
To save valuable time and money on billing, law firms must have a clear, standardized law firm billing policy that ensures consistency across staff and keeps billing transparent to the client. Presenting this information during the intake will greatly reduce confusion about your company’s billing process. It is also an accountability tool for both your company and the client during the attorney-client relationship.
Ideally, legal billing policies should cover:
Descriptions of scope of work
Expected billable hours (if applicable)
A detailed invoice timeline with a specific date
Payment methods available for customer to pay
Contact information for billing questions
This isn’t an exhaustive list, but it’s a good start if your company doesn’t have formalized documentation for billing customers. As a general rule, it is best not to assume that customers understand the legal billing process and that you should provide more information than is necessary to avoid miscommunication.
Your statutory billing policy should be reviewed at least annually. Rather if you make changes that affect your customers.
An overview of your company’s billing process
Have you taken a close look at your company’s billing process? Every now and then it is useful to organize each step. Whether on paper or an online document, create a visual overview of who is responsible for creating invoices, who sends the invoice, how the customer pays, who follows up on non-payment, and so on. Visually viewing this process will help you identify any bottlenecks in your current billing process and make the necessary changes. You may realize that you are creating barriers for customers to pay their invoices on time, or that there is an error in your company’s billing workflow process that is slowing down the billing process.
Automated workflows are an easy way to keep your team accountable during the billing process. You can create a workflow for almost any process and save it, so you don’t have to reinvent the wheel for every customer. For example, you can create a workflow called “standard billing process.” Within this workflow, you can assign date-specific tasks to employees who trigger events. An example task might be that once a customer is onboard, you assign a task in the billing workflow to enable the customer portal and save the signed billing policy document.
Standardize your billing process
Invoicing is an essential but time-consuming process for most law firms. Especially if they still use a paper-based process to generate, send and track invoices. This traditional method requires law firms to spend unnecessary hours creating invoice templates for each client, and there is no foolproof way to track invoice status without a spreadsheet.
If you are one of the law firms that is fed up with the mundane invoice process, automated custom invoice templates are an easy solution to speed up this process and significantly reduce the time your law firm spends on invoicing. PracticePanther standardizes your company’s billing process with templates that can be customized and adapted to your needs. Every case is different, which means every invoice should be different. However, if there are certain types of business that your company usually handles, you can create invoice templates for each of them to quickly reference and generate. This way you don’t waste time reinventing the wheel for every customer or risk making mistakes.
Have a plan for collections or disputes
Deferred payments do happen, but your law firm shouldn’t allow them to hang around for months. Whether a customer is busy or having trouble paying their bill, it’s important to have systems in place to support them. Automated reminders and payment plans are an added convenience that benefits your business and the customer. It also holds both parties accountable during the business relationship. This information should also appear in your company’s billing policy that the customer signs during onboarding.
Disputed payments should also be described in your billing policy and handled within your law firm. You will want to consider who the customer should contact, how disputes are handled, and solutions. Best practice is to review any previous customer disputes and create a standard process if the scenario arises. If you notice a specific trend in customer disputes, it may be time to review your billing process and realign your policies.
Be transparent with the customer
Customers should have clear communication about your company’s billing policies, including when invoices come in, how often, how long to pay, and what payment methods are available. This notice must also include the consequences or sanctions of late payments.
All customers should receive a copy of the billing policy after the initial consultation. There is a lot of information during a consultation, so having this information in writing allows them to review the information when it suits them. As mentioned before, you can save this document in the customer portal so that the customer can access it however they want.
Use legal billing software to reduce depreciation and write-downs
Implementing billing strategies and procedures helps law firms reduce depreciation and write-downs, increasing overall profitability and efficiency. Law firm management platforms with legal billing software solutions help law firms with tools for automation, customizable invoices, e-payments, detailed reporting, and a streamlined billing process.