Getting invoicing right is one of the fundamentals of running a business, but it can be a time-consuming and detailed process. As 2023 approaches, here’s how yo...
Getting invoicing right is one of the fundamentals of running a business, but it can be a time-consuming and detailed process. As 2023 approaches, here’s how you can improve your law firm’s billing processes.
To optimise your billing, first look at what your team are already doing. Consider whether your firm’s process is consistent across all staff and departments, whether there are errors being introduced at any stage, and whether the process is straightforward and clear.
Adjust your billing policy to ensure that any gaps or issues that you’ve identified are resolved. This should include examining:
Create documentation of your billing policies and invoicing process, share this with existing staff, and ensure new staff receive adequate training as part of their onboarding process.
Using legal software like LawMaster can help you implement consistent billing processes and minimise errors and administration through automation. It’s clearly visible when work on a matter has already been billed for, you can ensure invoice data is accurate as it’s merged from the matter, and you have oversight of all costs and billable time included on the invoice. It’s also a straightforward process to generate reports on overdue accounts.
When you’re sending invoices, it’s imperative that the details are correct. Automation features reduce the risk of human error as data is merged directly from your matter.
Your invoice should include:
If your firm is registered for GST, you’ll also need to include the words “Tax Invoice” clearly and include the GST amount for your firm’s services.
Small changes to your invoices can also increase the likelihood of being paid on time—for instance including the words please and thank you have been shown to influence prompt payment, as have shorter payment terms.
LawMaster’s client billing process is streamlined to ensure none of the detail is missed when you’re ready to send invoices to clients. Identify the matters to bill, raise a draft, add further costs or disbursements, and review your bill before finalising.
Including payment terms on your invoices is not just best practice, it ensures your clients have a clear understanding of their financial obligations.
Shorter payment terms can make payment more likely, and the due date and any penalties for late payment should be included on your invoice.
As an alternative to a penalty for late payment, some businesses offer a small discount for prompt payment, this approach may help your clients feel their business is valued. In the case of late payment, interest cannot be charged unless the solicitor's bill states that interest is payable and provides information about the rate. As the laws around this vary, you’ll need to confirm your firm is compliant with the relevant laws in your state.
Offering more than one payment method removes any barriers to payment that your clients might have—making payment as easy as possible increases the likelihood that your invoices will be paid promptly. Payment methods you should include are:
Debt collection processes are heavily regulated, and the ACCC advises that “a debt collector should only contact a debtor for a reasonable purpose and only when necessary.” Your firm should ensure any debt collection processes are standardised and compliant with ACCC guidelines.
Be sure you have attempted to contact debtors by letter and phone before issuing a complaint. You should also keep transparent records of any attempts to contact a debtor over an unpaid invoice. LawMaster’s streamlined reporting provides easy visibility on outstanding accounts and workflow automation triggers follow-ups for outstanding debts.
Consider in what circumstances you may want to be more lenient with payment deadlines or interest on overdue debts, and make sure any staff involved in the debt collection process are aware of your guidelines.
LawMaster’s practice management software can support your firm to streamline billing, freeing your team from time-consuming administration to focus on billable work. LawMaster provides a comprehensive Trust Accounting functionality certified by the Law Society of New South Wales, and has everything your firm needs for day-to-day accounting, budgeting, and financial reporting. The accurate billing process improves your bottom line, with all costs, fees and disbursements integrated from one source of truth.
Find out more about LawMaster's financial management capabilities.