Best Practices for Law Firm Invoices [Guest Post]
We thank the Lawyerist.com team for this guest post.
To literally no one’s surprise, solo lawyers and small-firm attorneys struggle with invoicing
For example, a somewhat-dated (but still illustrative) LexisNexis survey says:
- 73% of law firms report problems with past-due accounts;
- 58% spend too much time on billing; and
- About 50% of small law firms complain that 4 in 10 bills are past due.
Whether these struggles come from your inconsistent time tracking, sending invoices irregularly, or frustration about the time-suck of your firm’s invoicing process, the result is the same: client frustration, lost revenue, and potential ethics violations.
You can avoid billing disputes, maximize revenue capture, and avoid ethical quagmires by improving your invoicing process. Start your improvements today by following these six best practices for law firm invoices:
- Choose the best timekeeping method for you and stick to it.Use a paper system, a spreadsheet, or timekeeping software. Just make sure you choose a timekeeping method that works best for you (i.e., one you will use). Then, capture all your time—as you go!—while including all billable time on your invoices.
- Use a professionally-designed invoice template. When you create invoices, create a well-designed Word template or use a template offered by your billing software. Your invoice is one of your best and most frequent branding opportunities. Whichever template you choose, include your logo and contact information, date, invoice number, and boilerplate copy about how your firm handles late payments. You could also include your firm’s federal employer identification number, which your clients will need when it comes to paying their taxes at year’s end.
- Get descriptive in your itemized descriptions.Instead of writing things like “review court documents” or “draft pleadings,” write more detailed descriptions to show the importance of the tasks you completed. Detailed descriptions let your clients to see your work’s value, leading to less confusion and potential consternation about fees.
- Keep an eye on ethics. Lawyers have a duty to avoid making false or misleading statements about their services. When creating your invoice, do not add items or costs for services that would mislead a client about the work you are performing. And always include your trust balance if you are working on retainer.
- Start accepting electronic payments.Offering different payment methods will help reduce accounts receivable, shrink payment delays, and juice revenues. Perhaps more importantly, it is a client service. Clients expect to pay how they want to pay. For some, that means using PayPal. Others will have you run their credit card. Still others will write an old-fashioned check. The more flexible and user-friendly you make these options, the happier your clients will be.
- Set an invoicing schedule.Invoicing regularly—monthly, at a minimum—keeps your clients aware of your services and their fees. If you regularly forget to run your invoicing process, set a repeating calendar reminder or use your timekeeping and billing software to set reminders at regular intervals.
As you work to improve your invoicing process, also consider incorporating a client-feedback touchpoint. For instance, in your “thank you for your payment!” emails, you can ask your clients to rank how likely they are to recommend you to a friend or family member. Their answers will reveal your Net Promoter Score, a well-recognized client-loyalty measure. (Not familiar with Net Promoter Scores and other law-firm KPIs? We welcome you to listen to this episode of the Lawyerist podcast.) And if you aren’t scoring particularly well, this exchange will provide a ripe opportunity to re-engage with your client to improve their experience.
Regular invoicing is a critical administrative duty that often falls by the wayside. This is true despite its primacy to your firm’s survival, its likelihood of decreasing billing disputes with your clients, and its propensity to keep you out of hot water with ethics regulators. If you would like to learn more about your firm’s strengths and weaknesses—like invoicing!—and what you can do to better position your firm for success, we encourage you to take Lawyerist’s Small Firm Scorecard.
VIEWS AND CONCLUSIONS EXPRESSED IN ARTICLES HEREIN ARE THOSE OF THE AUTHORS AND NOT NECESSARILY THOSE OF FLORIDA BAR STAFF, OFFICIALS, OR BOARD OF GOVERNORS OF THE FLORIDA BAR.