Determining the ideal law firm billing frequency is a common source of uncertainty for legal professionals. How often should lawyers send invoices - should it be monthly, following significant milestones, or immediately after services are provided?
The frequency of legal billing varies and depends largely on the nature of your practice and client agreements. While more frequent billing can enhance cash flow and keep clients informed, certain situations might warrant a different approach.
We’ll demystify the topic of invoicing frequency for lawyers so you can concentrate on your legal work rather than billing logistics. You’ll feel confident fine-tuning your invoicing schedule by the time you finish reading. The best part? You can automate this process entirely with the #1 law firm billing software: InvoiceSherpa.
Our accounts receivable automation software ensures bills are sent out at the optimum time without you having to lift a finger, even going as far as to automate payment reminder remains if necessary. Learn how our solution can save you time and stress, strengthen client relationships, and help you get paid faster with a 14-day free trial!
Selecting the right legal billing frequency sounds so simple - yet, it has more profound implications than you may assume. It impacts your cash flow, influences client relations, and determines how much time you spend on your invoicing process.
Making sure clients know when to anticipate invoices reduces surprises and helps them manage their own finances better.
This transparency fosters trust and can lead to stronger, more reliable client relationships. It’s essential for lawyers to communicate their billing schedule upfront and stick to it consistently to avoid misunderstandings and maintain a professional rapport.
Optimal billing frequency also translates into time savings for the firm. Your firm can reduce the administrative burden associated with manual billing by automating the invoicing process based on a set schedule.
Regular, predictable billing cycles streamline internal processes, allowing staff to allocate more time to high-value activities like client service and case strategy, rather than getting bogged down in financial administration.
A well-managed legal billing frequency supports steady cash flow, which is the lifeblood of any business, including law firms.
Regular invoicing helps ensure that revenues are coming in at a consistent rate, which is crucial for covering operational costs, from payroll to office expenses.
Moreover, it can help law firms identify and address payment issues promptly, such as following up on overdue accounts before unbilled revenue turns into uncollectable receivables.
You can learn more about how cash flow problems usually start along with the importance of cash flow in general in our blog. But at this point, let’s get to what brought you here today - how often should lawyers send invoices to their clients?
Knowing the importance of your law firm’s billing schedule, we’ll present three different avenues you can consider: monthly invoicing, milestone-based invoicing, and one-time service invoicing.
Each approach has its merits and is suitable for different legal service scenarios. You’ll have a clear understanding of when to use which after reading below!
Monthly billing is the most traditional and widely used method, in which invoices are sent out at the same time each month, covering all services rendered during that period. This regularity helps both the firm and clients budget and manage finances effectively.
This is advantageous as it creates a predictable revenue stream and simplifies bookkeeping. On the other side of the coin, clients become accustomed to receiving their invoices at the same time each month, which can facilitate timely payments and steady cash flow.
Implementing monthly billing effectively requires your firm to maintain diligent time tracking and administrative processes. You must ensure all billable activities are captured and billed accurately each month. Detailed records that justify the charges on each invoice will minimize disputes while fostering trust.
Milestone-based billing ties invoice issuance to the completion of significant phases or milestones in a case or project. This method is particularly suitable for large, complex cases or projects where work is clearly delineated into distinct stages.
You’re essentially aligning your invoicing schedule with the delivery of substantial value, which can be more satisfying and understandable for clients.
Say, for example, you have an initial consultation where you spend a few hours meeting with a client and preparing their case. Or, maybe you built out and served a suit on your client’s behalf. These are a few instances where milestone-based billing may make sense, as it could take months if not years to wrap up some cases.
Communication is imperative if you choose to use this form of invoicing. Define the milestones clearly at the beginning of the engagement with your client. Each milestone and its associated costs should be documented in the engagement agreement to avoid misunderstandings.
Immediate billing is used for one-time services or short-term engagements where the legal work is concluded quickly, such as consulting on a specific issue, drafting a document, or representing a client in a one-off court appearance.
This allows you to close the loop on discrete tasks swiftly, ensuring they are paid promptly for the work done. This can improve cash flow and reduce the administrative burden of tracking work over extended periods.
However, this method means your firm must act quickly to generate and send invoices upon completion of the service. You’ll need to have your internal processes dialed in to quickly document services and bill the client.
Don’t worry - we’ll show you how you can use the best automated invoice processing software to streamline this process and eliminate the manual hassle of any type of invoicing in just a moment.
But, in summary, there isn’t a right or wrong answer as to which lawyer billing frequency you should use. Consider what makes the most sense for your specific law firm and clientele.
If you have ongoing relationships with your clients, opt for monthly or milestone-based billing. On the other hand, if you frequently work with clients on a one-off basis, immediate billing upon completion of services makes the most sense.
We hope you have a clear grasp on how often lawyers should send invoices now - but there is a lot more that goes into learning how to do billing for lawyers than simply deciding on your law firm’s invoicing frequency.
You don’t need to outsource AR, though - these tips below will empower you to take control of your finances and manage the invoicing process with confidence.
Whether you’re sending a lawn care invoice, plumber invoice, or a law firm invoice - clear, detailed descriptions are non-negotiable. A well-prepared invoice provides a clear snapshot of the services rendered and breaks down the work done into understandable segments.
Each entry should include the date of the service, a brief description of the task, the time spent, and the charge for that service. This transparency helps clients understand exactly what they are being billed for, reducing the likelihood of disputes and enhancing their trust in your firm.
Clear descriptions also facilitate quicker payment processing, as clients can easily verify the services and correlate them with their records. This practice also aligns with legal billing standards and can serve as an important record for both financial tracking and compliance purposes.
Clients expect convenience and efficiency in all aspects of service, including payments. Besides traditional methods like checks or bank transfers, consider offering online payments through credit cards, ACH transfers, or payment platforms specifically designed for legal services.
This reduces friction and makes it easier for clients to settle their bills - reducing the likelihood of late or nonpayment. It also accelerates the payment cycle, improving your firm's cash flow.
But, how can you offer more payment options for your clients without taking on more stress and headaches? Simple - just invest in the best AR automation software. We’ll highlight the role of automation in general below and show you why InvoiceSherpa is the premier choice for legal professionals.
The truth is that manual invoicing sucks. It’s complicated, time consuming, and prone to human error that can lead to more confusion when it comes time for AR reconciliation.
Lawyers can’t afford to waste their time or mental bandwidth on this, which is why some consider 3rd party accounts receivable management services. These can be incredibly expensive though, and still leave you exposed to human error. Besides - you want to keep your financial information in-house.
This is the appeal of AR automation. These systems improve the billing process's efficiency and accuracy, handling tasks like generating and sending invoices to following up on unpaid bills and integrating with your firm’s accounting software.
Automated systems minimize the manual input required, reducing the risk of errors and freeing up time that can be better spent on client service and case work. They can also provide real-time insights into your firm's financial status, enabling better cash flow management and strategic planning.
So, how can you reap the accounts receivable automation benefits? Look no further than InvoiceSherpa. Our software helps you get paid faster, staying on top of every single receivable and sending out structured, customized invoices on your behalf.
The software even sends out scheduled reminders via email or SMS, and automatically adds invoice late fees. You can fine-tune the invoice late fee wording as you see fit.
Your clients get their own portal where they can view outstanding and past invoices. There, they can choose from a wide array of payment options to help you capture funds quickly. This payment then automatically syncs with your accounting software.
If you have any clients on retainer, you can set up automatic payments to further eliminate client friction and internal resources.
The best part? InvoiceSherpa integrates with an array of other software, like Clio, LawPay, Quickbooks, PayPal, and many more. Getting set up takes just a few clicks, and you can try our solution 100% risk-free with a 14-day trial. No credit card is needed to sign up!
So, incorporate automation into your invoicing process today with InvoiceSherpa and streamline your lawyer invoice frequency once and for all.
There you have it - everything you need to know about your legal billing frequency. So, how often should a lawyer send invoices?
As you now know, it all depends on your firm’s specific cash flow needs and the relationships you have with your clients. Whether opting for monthly, milestone-based, or immediate billing, the key is clarity, flexibility, and automation in your invoicing process.
Find more small business accounting tips and tricks in our blog, including how to send a bill to collections, how to calculate accounts receivable, how to write a demand for payment letter, what can a lawyer do if you don't pay them, can lawyers charge interest on invoice, and more.
Ready to enhance your billing process? InvoiceSherpa's automated solutions are a click away ready to optimize your law firm's billing frequency and efficiency. Put the stress of invoicing and cash flow in the past today!
April 4, 2024
