Tech Tip #51: Five Ways to Support Healthy Cash Flow and Profits at Your Firm
When you think of law firm billing workflows, you think of daily time and expense tracking entries, account reviews, generating invoices, sending out invoices, recording payments and sending out collections reminders. There are a lot of little steps that go into billing, but if you follow these 5 tips, you’ll be able to support a healthy cash flow and profits at your firm.
- Make sure you’re logging all billable activities. This is a no-brainer, but it’s easy to forget all the different events, tasks, notes, emails, documents and calls, especially when they are tracked in different tools. ”
- Stay on top of cost recovery. Make sure all costs, including both direct and indirect costs, are billed to your client to get them reimbursed.
- Leverage automated billing and payments. Routine billing, batch invoice generation, and custom invoice templates all create the appropriate expectations from your clients and prompt payments.
- Take both a proactive and reactive approach to collections. Proactive measures include billing on a timely basis, tracking unbilled and retained amounts, and sending out periodic retainer replenishment notices. The reactive approach is to send batch collection notices.
- Keep track of the appropriate billing metrics. Is your billable and non-billable time proportional? Are you comparing your A/R, WIPs and retainer balances? Are you tracking time even on fixed-fee cases? Which people on your team are collecting the most fees?
Learn more about the billing best practices used by profitable law firms.