As with any business, the main goal of a law firm is profit. Without a healthy profit, a law firm will eventually go under. This seems to be a simple problem: Need more profit? Get more clients. However, this ignores an important factor many firms experience: clients don’t always pay in full or on time. If the root cause of this issue isn’t addressed, it doesn’t matter how many clients you have – you’ll still be cash strapped.
At Ricoh, we’ve seen this issue with many clients. Unfortunately, it impacts not just cash flow but your bottom line. Realization rates seem to be getting worse, meaning firms are collecting less money on every dollar billed. A 10% drop in realization rates means firms are collecting a full $100,000 less per million dollars billed!
Ricoh has worked extensively with law firms across the country & we know the business of law so we’re happy to share our Top 5 Tips To Collect The Money You’re Due.
1. Make it easy
Your clients are busy people. If you present them with a complicated payment structure, they may put it off or even forget about it. The Ricoh solution offers a simple, efficient workflow to generate accurate & comprehensive invoices to clients. If it’s easy for them to do, they’ll pay you more quickly!
2. Keep your lawyers involved
Your lawyers are the people that your clients see on a regular basis. Your clients trust them so it’s vital to capitalize on this relationship. Your lawyers can gently remind their clients when payments are due & since clients value these relationships, they are more likely to pay their invoices in a prompt manner
3. Make it standard
It’s likely that your firm represents clients of all different stripes. Often, these different clients get significantly different engagement letters. This can make the task of payment & collection difficult to manage; some things may be missed & no one will be the wiser. Imagine a standard payment process for all clients! As a bonus, this process can be linked to an automatic workflow program to increase efficiency & free up valuable employee time.
4. Educate your team
It is important to educate everyone on your team, including your partners, on the importance of effective collection. After all, it affects everyone’s paycheck & the success of your business as a whole which should make the entire team invested in making investments in automated systems that save time & money.
5. Make it cyclical
Having a standardized cyclical workflow – which includes reviews – will make it much simpler to track payments. This can be linked to an automated process which alerts pertinent individuals when there are irregularities or late payments so they can reach out to clients & get to the bottom of the issue without delay.
By following these 5 simple tips, you can increase your realization rate, meaningfully contribute to your firm’s bottom line & get back to the business of law.
See how other Canadian law firms are getting back to the business of law at www.RicohChangeMakers.ca.