If you’re running a legal practice, managing your cash flow effectively is a necessity for survival and growth. 

One of the more frustrating aspects of cash flow is dealing with late invoices. For law firms, managing partners, and firm administrators, chasing down clients to pay late invoices can be all too familiar. It’s time-consuming and diverts your attention from billable or business-generating work. 

It’s also a common problem: 59% of lawyers report regularly dealing with late payments, and on average, lawyers are only collecting 86% of what they bill. 

Ensuring that every invoice you send gets paid on time might seem unrealistic, but with the right strategies and practices in place, prompt client payments can be a reality. 

Strapped for cash: The impact of late payments 

Late payments can severely impact your law firm. Issues caused by late payments include: 

• Decreased cash flow 
• Lost billable hours 
• Strained client relationships 

Each of these issues can create cascading problems. For example, a disrupted cash flow makes it difficult to meet financial obligations like payroll, rent, and other operational expenses. It also becomes harder to grow your firm when you don’t have predictable income.  

Similarly, the time and resources you spend chasing late payments can seriously impact your efficiency, taking away from client service and business development opportunities. 

The check’s in the mail: Common reasons for late payments 

While it may be tempting to assign blame for late payments to clients, this isn’t necessarily the case. If you have a recurring problem with late payments, understanding why this keeps happening is the first step to solving the problem. 

Common reasons for late payments: 

• Unclear payment processes: If your clients are unsure of how or when to pay, delays are going to be an inevitable part of doing business. 
• Inconsistent billing: Erratic billing practices can confuse your clients and disrupt their payment schedules, creating additional stress for them and for you due to a lack of consistency. 
• Lack of client-friendly practices: Your clients expect convenience, especially with paying bills. If you’re not offering online payments or alternative fee structures, you’re creating a barrier between your clients and your bank account. 

7 best practices for getting paid on time 

Getting paid faster requires law firms to take proactive measures to improve their accounts receivable. Here are seven easy-to-implement best practices that law firms can put into place.  

1. Establish clear payment policies

If you want to get paid on time, start with clear expectations. Outline due dates, the payment methods you accept, and any late penalties. 

Discuss your payment terms with clients during onboarding and provide them with a written or digital copy. Payment terms should also be clearly visible on every invoice.

Having a written agreement or policy that is acknowledged by your clients can help avoid any misunderstandings and reinforce the importance of making timely payments. 

2. Standardize your payment processes

Consistency in your billing process not only makes your firm more efficient—it also makes it easier for your clients to pay their invoices. Sending regular, predictable invoices will eliminate surprises and help your clients manage their finances better, making them more likely to pay on time. 

Trying to standardize manual billing processes can be a big task, though. If you don’t already have automated invoicing software in place, consider making the investment. Automating your billing can save you time and help you be more consistent without extra work.  

3. Embrace online payments

Your clients pay for everything from movie tickets to rent online. If you’re not providing the same level of convenience, you’re missing out on the opportunity to get paid faster.

Offering online payment options caters to the preferences of most clients and can significantly speed up the payment process; for example, funds from payment processors like CosmoLexPay can be available in as little as 24 hours.  

4. Review your fee structures

If you want to generate more business and still get paid on time, you need to be prepared to accommodate a broader range of payment needs.

Payment plan and retainers provide a predictable cash flow and financial stability for the firms, while accommodating your clients’ budgeting needs , and alternative fee structures like flat fees and payment plans can offer transparency and predictability. 

5. Automate reminders

We all know what it’s like to receive a bill, set it to the side, and promptly forget about it. Your clients are no different. Instead of waiting until the bill is past due, incorporate automated payment reminders into your payment processes so your clients always know when due dates are around the corner. 

6. Make reporting a regular practice

Making decisions on your billing practices without data is like driving in the dark without headlights—you’re going somewhere, but where exactly is anyone’s guess. 

Regularly reviewing your billing and payment processes can provide invaluable insights into patterns or recurring issues. 

The evaluations can help you identify areas for improvement, from client communication to billing practices and payment options, to ensure your invoicing processes are driving you forward instead of holding you back. 

7. Using technology to support faster payments

Best practices are one thing, but they can require time and effort to implement. Instead of trying to put new processes into place manually, consider the valuable role of legal software in improving your payment strategies.   

With the right payment software, you can benefit from features that help you enact the best practices mentioned above, such as: 

• Automated invoicing: Eliminate manual billing and replace it with automated invoices that allow for the quick generation and dispatch of invoices. 
• Online payment processing: Provide your clients with the ability to pay their bills from any device with an internet connection, making it more likely that you’ll be paid on time. 
• Proactive payment reminders: With automated payment reminders, follow-up fatigue can be a thing of the past. These reminders gently notify clients about upcoming and overdue payments, ensuring your invoices don’t fall through the cracks. 

Supercharge your payment process with CosmoLexPay 

The goal of getting paid for every invoice isn’t unreachable for law firms that put best practices into place with their billing processes and use the right tools for the job.  

While there are plenty of payment processing solutions on the market, not all of them were created with the unique needs of law firms in mind—that’s why we created CosmoLexPay. 

From sending automated reminders to clients so they don’t miss payments, to allowing you to swiftly process online payments without any hassle, we’ve got the tools you need to get paid for every single invoice you send.  

Ready to make the switch? Sign up for a 10-day free trial now.