The legal invoicing process can be a headache for many law firms. From managing different accounts and payment terms, to ensuring time tracking is accurate, and the invoice reflecting different fee structures, it’s hard to imagine a frictionless version of this workflow. work. Fortunately, automated legal billing software has made this process seamless for law firms of all sizes.
This blog post will go into more detail on how to create a custom legal invoice template and the benefits for your business.
How do lawyers track their time?
The way legal professionals track time spent on a case has evolved over the years. Traditional practices included:
Fill in tasks and time entries directly into their calendar;
Cross-check the timestamp of a sent email;
Tracking of time spent working on a document;
Phone call history tracking;
Excel sheets listing their daily activities;
Or just write from memory how they spent their time throughout the day.
Although traditional, these strategies have hidden flaws. In addition to being inefficient and time-consuming, the human aspect leaves room for error. Today, there are several legal invoicing software with time tracking features and additional features that have many benefits for businesses.
Using time tracking software, an attorney’s hourly rate can be broken down into specific billable time slots that can be easily substantiated on behalf of the client. Automated time tracking also saves time trying to log hours and allows for greater accuracy as a few minutes of an email response can be easily captured.
When does a lawyer charge for his services?
Lawyers typically bill a client once their service has been fully completed. This time frame may vary depending on the area of practice and the nature of the service.
For example, corporate lawyers who work for small businesses will sometimes, out of goodwill, wait until a client is profitable before billing them for their incorporation. Alternatively, an on-going HR legal advisory service could be billed monthly, while payment for divorce assistance could be made in a one-time lump sum payment once everything is finalized.
Communicating the billing schedule and policy to a customer upfront is key to mitigating common billing errors. Plus, no one likes receiving an unexpectedly heavy bill.
While it’s nearly impossible to predict the exact number of hours it will take to complete a customer case, an approximation can give customers a general idea of what they can expect to pay and when.
How to Create a Custom Legal Invoice Template
Law firms have unique yet complex billing needs. To respond to this reality, legal invoicing software has appeared on the market. These resources are an indispensable part of any company’s technology stack as they address the complex nature of legal invoicing.
Bill4Time is equipped with features to manage all aspects of the billing process. The platform lets you create custom invoice templates that can be stored for repeated use.
Invoice templates reduce administrative work because your details, hourly rates, customer information, and payment method are included in the invoice. You can also customize invoice templates to brand your company. Finally, they can also be used to automate recurring invoices, while keeping the process professional and organized.
What is included in a legal invoice template?
There are a few common elements that are always included in a legal invoice template:
Contact information: the contact details of the law firm and the client must be clearly indicated in the header of the invoice. This includes the company name, first and last name of their point of contact, a phone number, email, and address.
Send date: the date on which the invoice was created and sent must be indicated for accounting purposes, but also to take into account the terms of payment. For example, if the payment is due 30 days after receipt of the invoice, the indication of the date will make it easier to identify the deadline.
Payment terms: payment terms and expectations should be identified on the invoice.
Hours billed: the total amount due should be broken down to include the number of hours billed for the services provided.
Line items with service date and associated cost: details of the services provided should be given for clarity.
Total: the invoice must include the total amount of the various services and taxes where applicable.
Due date: to ensure that payment is received within a reasonable time, the due date should be indicated on the invoice.
Best practices for sending a legal invoice
Having a client-focused approach to your firm’s practice applies to all client interactions. From their initial entry to payment, having a good reputation and repeat business requires customers to feel understood and appreciated throughout their interactions. A pleasant billing experience can be an opportunity to set yourself apart from your competition.
Before sending an invoice, ask your customer who the invoice should be issued to and if they have a preferred payment method – does the customer prefer to receive an invoice by email or rather go through the customer portal ? Do they want to pay by credit card online or by check? These are all factors to consider before sending the invoice.
How to get customers to pay their legal bill
Chasing a customer over an unpaid invoice is never pleasant. Below are some practical steps to help mitigate the likelihood of late or unpaid invoices.
Clearly communicate your billing policy
The initial customer onboarding consultation is the perfect opportunity to clearly communicate billing and payment expectations. This information should be provided transparently during the first meeting and written in the onboarding documents.
Invoice your customers on time
The best way to consistently send invoices on time is to set automated reminders. Creating a reminder system where customers receive their monthly statements three to four days after the start of the month can help increase the likelihood of timely payments. Most people set their payroll around the beginning of the month, which means your customer invoice will be paid after the employee payroll has been processed. In addition, having a fixed schedule crystallizes expectations and minimizes the time between completion and invoicing of the work.
Offer an online payment option
Each invoice should be clear, concise and have a simple payment system. To avoid the tedious practice of processing paper checks, offer an online payment option to your customers. With Bill4Time’s integrated payment processor, Bill4Time Payments, you can accept and process online payments directly on the platform. You can also create custom payment links to add to your website or even your emails.
Just adding this popular payment method can get your law firm paid 70% faster than average billing practices.
Follow-up of your legal invoicing
By using automated legal invoicing software, you have access to comprehensive reports to view your company’s financial performance, including:
Account activity report: a general accounting report that reflects payments made from the trust account to the operating account.
Account balance report: an accounting report with the balance due for each project.
Billable Usage Report: a report describing the objectives in relation to what was actually invoiced.
Customer list report: a report showing various details about the client.
Collection report: a payment report showing the amount collected for each invoice.
Inactivity report: a report showing how long a project has been worked on.
Report on the age of customer invoices: a standard aged accounts receivable report.
Report on billing emails: an invoice history report.
Invoice Status Report: a report listing payments that need to be applied to invoices.
Project summary report
Achievement report: a ratio of the invoiced/finalized amount divided by the total number of hours.
Resource usage report: a report with performance targets in the user profile in relation to working hours.
By identifying and visualizing this data, you can identify trends for success and gain insight into projected revenue.
Implement a Custom Legal Invoice Template Process
With minimal up-front work, your law firm can create a legal billing and invoicing process that will save you time and money down the road.
This article was written by Kamron Sanders.
©2006-2022, BILL4TIME. ALL RIGHTS RESERVED.National Law Review, Volume XII, Number 244