Why Law Firms Benefit from Combining AFA’s with Electronic Payment Processing
AFA’s are a great alternative to traditional legal billing. However, if you’re ultimately collecting money inefficiently, all of your good intentions can fall flat.
Consider what most firms do, regardless of billing structure: They print bills. Fold them. Label envelopes. Stuff the invoices into envelopes. Buy stamps. Stamp the envelopes. Send the invoices.
Then they wait…and wait. Eventually, a paper check arrives in the mail, which someone deposits into a bank account along with all the corresponding ledger entries.
Imagine if this was all automated. And imagine if you kept clients’ credit card or bank account information securely on file. Not only would most of your clients prefer to pay without a paper check, but processing payments would be so much easier.
If you’re in the mindset that you need to update your billing practices anyhow, now’s a good time to think about getting your collections side right. Most law firms really lose out on efficiency here.
In terms of bringing more money into your firm, it’s not just the shift away from billable time that matters—it’s getting more money in the door earlier that will really make a difference to your bottom line and your cash flow (see our article “The Single Most Critical Piece of Business Advice New Law Firms Need to Know”).
Electronic billing eliminates most of this waste. Instead of printing and sending paper invoices, you send your bills over email. Online payment allows your clients to type in credit card or bank account information, ensuring quick payment. Not only are you eliminating a ton of busywork that is error-prone and gobbles up tons of time, but you’re also shortening your cash collection cycle.
Electronic billing can take several forms, the most basic of which is sending an invoice with a link to a payment page. More sophisticated options, like those provided by Rocket Matter, allow you to support AFA’s through payment plans or recurring billing.
Our advice: If you’re exploring implementing changes to your billing practices, including AFA’s, make sure you know how you’re going to bill and collect for them as part of your due diligence.