The billing department of your law firm is often subjected to almost unfair challenges and pressures on account of being your firm’s financial backbone. The COVID-19 situation has toughened situations further leading to confusion in methods of operation everywhere and this has subjected the billing side to even more stress than usual. Attorneys put in the work that brings the money, but whether the money comes in is something they place beyond their concern. It comes down to the billing department to ensure that the invoice is accurate and sent out on time such that a proper cash flow is maintained. This is just one of the challenges faced by the billing departments of law firms across the world irrespective of size. Through this post, we explore some of the most common challenges faced by law firm billing departments and what you can do to solve them effectively.
1. Complicated Client Billing Guidelines
Your clients and their TPAs are undoubtedly way ahead of the game now and have ultra-specific billing guidelines for outside counsel. At one glance, they might just appear to be generic. But upon reading it thoroughly, you will see notable differences in the guidelines set by each client. They have specifications for almost every activity and expense. For example, if you are charging them for photocopies, some clients have prices fixed per copy whereas others might charge you only if the volume of copies exceeds a certain limit. Thorough scrutiny of your client guidelines becomes extremely important to avoid payment delays and unnecessary back-and-forth disputes. Both the billing department as well as timekeepers must be aware of the billing guidelines and abide by them.
2. Practices are not Standardized
With numerous vendors dictating their own billing rules and defining their expectations for the legal billing process, it is no surprise that your firm’s billing department is oftentimes confused and hassled. Yes, the Uniform Task-Based Management System (UTBMS) along with LEDES has established some level of uniformity. However, there are still many clients out there who use their billing codes and systems. This poses quite a challenge to the billing departments who need to organize their billing practices to accommodate the billing requirements- including formats and billing codes, of each client. A study conducted in association with LexisNexis indicated that 58% of firms complained that they spent too much time in billing.
3. Different Billing Frequencies
Forgetting to send the invoice out on time inevitably leads to payment delays and subsequent disruption in cash flow. The problem is, it is not easy to keep a track of all the billing deadlines for each client. If all of the required monthly invoices, this would be a piece of cake. However, with quarterly, monthly and bi-monthly billing dates to abide by, manually keeping a track of all of them becomes quite tedious. This can often lead to forgetting to send out invoices or invoicing a client ahead of time- both of which can place a dent in your client relationships. Moreover, not billing on time presents your clients with excuses not to pay you on time.
4. Timekeepers Lacking Clarity
If the timekeepers do not capture their daily activities with sufficient details and documentation to justify the charges, reasoning out these charges on the invoice becomes quite a task. No client is going to foot the bill for an activity that contains no detail about exactly why a task took as long as it did. Clients have expectations on how much time activity should reasonably take or how much cost should a simple expense incur. Every entry requires a minimum amount of explanation that only the timekeeper who performed the activity or incurred the expense can provide. Knowing that the lack of clarity can lead to reductions, billing personnel often have to chase down timekeepers asking them to provide information regarding every entry, which as you can imagine, is quite time-consuming.
5. Payment Delays by Clients
The ongoing pandemic has taken quite a toll on every industry and financial crises are all around us. Industries have just begun to recover and it is a slow process. Payments coming in from the client’s end might be delayed on account of their inability to process them on time. But other reasons could lead to payment delays which your firm might have some control over. This includes ensuring the production of error-free invoices and timely billing. It all comes down to minimizing the delay in all possible ways to maintain a steady cash flow. This is not a burden that should be dealt with by the billing department alone but they combined the effort of the whole firm to improve the overall efficiency.
Your firm’s billing department handles a lot of things at once but even the most efficient organizational bodies can be shaken by copious amounts of stress. With external situations not being quite favourable to facilitate the smooth running of the department, the best thing to do is look into tackling problems from within and working on the overall financial health of your law firm. A simple yet effective solution to revolutionize the billing practices and improve your firm’s efficiency is to adopt a hi-tech e-billing system that automates the time tracking and invoicing processes efficiently. Using technology, the billing department in your law firm can discover easy solutions to multiple problems such as dealing with different billing guidelines, billing formats while ensuring that all invoices are sent out periodically.
Accurate Legal BillingTM brings to you world-class billing solutions powered by artificial intelligence aimed at ensuring that all your firm’s invoices are entirely compliant with the client billing guidelines and devoid of any error whatsoever. You can choose from ALB’s different plans (1.0 and 2.0) and integrate the platform with your existing ones for convenience. Some of the features include Daily Activity Capture, Invoice Prep, Invoice Generation, Invoice Conversion, Real-Time Financial Reports, etc. With ALB, say goodbye to damaged client relations, poor cash flow and decreased profit margins. To know more about how it works and schedule a live demonstration, contact us today by clicking here.