Law Firm Cash Flow Solutions
If getting paid on time or with minimal effort from the clients at your law practice is a relatable pain point, keep reading.
Not Getting Paid in a Timely Manner
If your law firm client receives the invoice more than a month after the work was discussed and performed, they forget exactly what you spoke about. Sometimes, they call you to explain the basis of the legal fees again before they pay. Your time is money and you don’t get money for explaining an invoice.
If you can get the invoice to the client more quickly, they are more likely to remember the value of the work. How do you do this?
Case Study: Burkhalter Law Accelerates Cash Flow by 300%
Entering Time & The Invoice
LeanLaw accounting software gives you four different ways to enter time — and none of them involve a legal pad where you rip off the sheet and give it to a secretary.
- Mobile App (Android or iOS)
- Calendar view with Timers
- Web App Pop-Up
- Bulk Time Entry
Timekeeping in LeanLaw gets automatically pushed to your invoice. Streamlining this process gets it done faster. When clients receive their invoices quickly, they are more likely to pay quickly — especially if you have the option to pay electronically.
The financial health of your law firm depends on the collection of payments from the law practice’s billable hours and flat fees. Unpaid invoices should be a thing of the past.
What Do Your Invoices Communicate?
Lowering accounts receivable
The Bank Check
Are you still taking paper checks? It’s almost 2023: it’s time to stop with the checks. Make payment processing easy on your clients. They’ll pay faster that way.
Even with the fees on credit cards, you will come out ahead if you accept online payments — you won’t have to pay someone to chase that payment or take the check physically to the bank. And if you use the QuickBooks payment network with an ACH option, the fees are truly inexpensive.
IOLTA Trust Retainers
Many law firms are wary about have stopped taking retainers because the accounting is so complex. This is not a sustainable business practice. You will optimize current cash flow when you already have the money sitting in the trust account.
Why Does My Law Firm Need an IOLTA?
When you process retainers in an ABA compliant way, you never have to chase down your clients for payment. It’s all there: you just transfer the payment from the trust account to the law firm bank account.
With retainers, you can go from collecting 60 cents on the dollar to the whole dollar.
New clients should be onboarded with the trust retainer agreement in place — evergreen retainers are the next step to streamline your collection process.
Is QuickBooks Online the Right Billing and Accounting Software for Law Firms?
LeanLaw turns what used to be a daunting 12-step trust accounting process in QuickBooks Online into a few clicks. This is a true, ABA compliant integration with QuickBooks Online instead of a sync that someone in bookkeeping has to straighten out later.
The collection process does not have to be complicated. A client relationship an actually be salvaged by creating a payment plan with due dates. Many times, it’s just communication from the legal practice and follow up to the law client that will create a new understanding in what is owed.
Installing a payment plan to overdue invoices can also help with cash flow management. You’ll have a better understanding of what payments you will receive and when.
Trust Accounting Built Into the Legal Invoicing Workflow
LeanLaw: Anti-Practice Management Software
LeanLaw’s mission is to turn law firms into better businesses. Law firm profitability is an even higher goal than cash flow, but still, you need to collect payment to get to the point where your cash flow forecast isn’t causing you to lose sleep. When you understand the metrics of your business, you can measure that data and plan to have a cash reserve for the future — both for downturns and for growth.
Benefits of Data-Driven Productivity for Law Firms – LeanLaw
LeanLaw is legal accounting software with a deep integration with QuickBooks Online with QBO as the source of truth.
eBook: Law Firm Software Buyers’ Guide
Jonathon Fishman, two-time founder with an exit of $25 million. He has 20 years of C level experience specific to B2B focused software and solutions. He has a knack for translating and interpreting market conditions into internal and external objectives. He has developed businesses around immature markets in the areas of tele-health, educational assessment, interactive television, video game and web development and mobile technology. He’s also a crazy Lakers fan!