Professional Service Firms Articles
E-billing - Coming Soon to a Firm Near You
Target Audience: Legal Professionals, Professional Service Firms, Law Firm Accountants
Most invoices for legal services still arrive the old fashioned way — by snail mail. But a growing number of clients are requesting that their bills arrive via specialized e-billing systems designed for corporate law departments to interact with outside legal counsel. In fact, a 2004 Association of Corporate Counsel survey found that, while electronic billing was being used in only 6% of the law departments surveyed, 28% were considering the move to e-billing.
With this anticipated growth, it won’t be long before a client approaches your firm with a request — or mandate — to make the move. Before you balk at this departure from tradition, consider all the benefits you’ll reap by jumping on this bandwagon: faster billing, better cash flow management and, most important, increased client satisfaction.
Give clients what they want: Faster and cheaper
There are two important benefits to the client that are driving the e-billing system trend:
- Increased audit capabilities that allow a client to easily verify an invoice’s accuracy and do a quantitative analysis of the invoice.
For example, clients can review engagements to see if they’re staffed properly or compare the rates used on one engagement vs. another much more easily than with separate paper invoices.
- Streamlined processing of invoices as they move from the audit module to approval pending and then to OK-to-pay status.
Your clients will enjoy decreased costs inherent with processing an invoice, such as review time, handling, copying and filing. While many e-billing vendors tout these features as benefits for law firms as well — such as faster billing and better cash flow — many firms believe that, at this stage of the game, the costs still outweigh the benefits.
Implementation costs can add up
The costs come from the need to establish an interface with the e-billing system that the client has chosen to use. Plus, most vendors charge annual fees that can run from $1,000 to $2,000 per client or a percentage of the bills sent through their system. The implementation process, which consists of installing the software, training the firm’s personnel and interfacing with the client’s system, can be time-consuming and a burden for smaller firms that may not have adequate IT support.
Turning a negative into a positive
Rather than hoping your firm can avoid e-billing, take a proactive route instead: Become a resource for your clients and assist them in the system selection process. It will require upfront effort from your IT people and firm management, but it will also give you the opportunity to choose a system that works best for your firm, rather than having to accept whatever systems your clients choose.
If you use this opportunity to become a resource for your clients, it also will strengthen your relationships with them. This will be the most important benefit for both parties.
Know what’s right and do it
Most attorneys know that to maximize their own financial well being they must consent to systems and financial controls that will help successfully manage the firm. Unfortunately there is often a gap between knowing the right thing to do and actually doing it.
But by following the simple rules laid out above, your firm may find that managing its cash is a relatively painless exercise that can reap big rewards.
Find out how our expertise in accounting for professional service firms can add value to your business. Email us or call us at 1 (888) 875-9770.
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