For large law firms and small law offices, collecting outstanding accounts receivable is a challenge for many reasons; but time is usually the biggest issue. Because attorneys make their money on billable hours, getting them to take care of administrative duties, like chasing down late invoices, can be nearly impossible. Legal debt collection software can help.
Many firms rely on low-tech, manual tools to manage and track their invoices; usually a combination of spreadsheets and reports from their accounting system. While spreadsheets and aging reports are good for some things, they are not sophisticated enough to track an important and dynamic asset like accounts receivable.
While the legal industry has been historically resistant to new technology, this is beginning to change as firms realize that systems like legal debt collection software can help them become more productive in their daily activities and drastically increase cash flow. The top 4 arguments for investing in legal debt collection software are:
Time savings: Attorneys are busy, often too busy to effectively manage invoices. Legal debt collection software streamlines the entire process by automating invoice delivery, payment reminders, overdue notices, and scheduling actions for whoever is responsible for collections so they know exactly who to call, when, and why.
Increased cash flow: Accounts receivable is among a firm’s most important sources of working capital, but because of the time and effort it takes to effectively manage invoices, late payments and overdue invoices become the norm. When this happens cash flow slows and hinders a firms ability to cover expenses and grow the practice. With debt collection software, these seemingly endless, time consuming manual processes are put on auto-pilot and proven collections best practices can be put into place to increase cash flow, reduce days sales outstanding, and eliminate invoice disputes.
Return on investment: Most companies who implement debt collection software recognize a full return on investment in as little as 2 months; but don’t take our word for it- Use our free ROI calculator to calculate your expected ROI. The calculator finds your calculated DSO, AR financing cost, write-off amount, and write-off percentage. The ROI calculator also calculates your new DSO, annual saving in financing cost, and annual saving in write-offs, as well as your total savings, ROI percentage, and payback period.
Customer service: Attorneys provide a service and rely heavily on customer referrals to drive new business; so striving for high quality customer service and leaving clients with positive feelings about the firm is critical. Accounts receivable is usually the client’s last experience with your firm so making sure the invoicing and collections process is carried out professionally and seamlessly is important. Legal debt collection software pulls all of your client’s information into one central location and provides your collectors with insights into customer payment histories, invoices, contacts, and much more. With 24/7 access to this information, any collector in your firm can help customers with their invoices and answer any questions they might have about the status of their account to speed up payment and breed customer good-will.
In the end, the point is this, you’ve always relied on your accounting program to help you manage your finances, and while that system is a safe and reliable place to store information, and pull aging reports, it offers little else in terms of the communication automation, support of collections best practices, advanced reporting, dispute resolution, and other features you need to enable fast and effective actions.
With the help of a legal debt collection software system, firms can invoice clients faster, a proven way to speed up payment; reduce time consuming manual collections activities and focus their efforts on billable work; and quickly see which clients have outstanding invoices so they can more proactively manage them.