Start Your Firm Off In The Right Direction
Lately, I’ve been supplying you with information and resources to help you start your own law firm. Going along with my recent article on setting your own rates is today’s feature on billing methodology.
This is one of the most important variables that sets financially successful firms apart from the rest.
Your aim should be to employ a billing system that efficiently generates accurate bills without taking up too much of your time.
Ideally, your system will also collect information your firm can use to project future revenues, and that can help you locate opportunities for sustained growth.
I will outline an all too common law firm billing scenario to show you what you fundamentally must avoid, and follow that with a vision of your optimal billing system.
Let’s take a look shall we.
Here’s What You Don’t Want
Picture yourself spending time on the weekends creating your invoices and sending them off. You don’t have a structured and organized system, it’s just whenever you get a little bit of free time to take care of it.
You are running the risk of missing your accounting deadlines, your collections are lagging, and many clients are more than 30 days past payment.
You keep track of your hours on a legal pad, and you usually remember to do this while the work is being performed, rather than after the fact.
This is the worst case example of how a law firm could track hours and administer billing, but sadly this is very normal.
This kind of practice is missing out on automated features that ensure that all billable hours are recorded and provides metrics for future analysis.
A Practice To Be Emulated
In contrast to the above sketch is a prosperous firm that knows where it is financially at any moment, understands the costs of its business, and has the ability to forecast future finances.
Because of this, they simply have more time to be happy and enjoy life.
And that’s what we all want right?
These firms utilize time capturing software as a natural course of operations. They record all activity to be mined for internal financial reports, and invoices are created regularly and consistently.
These are lawyers with free weekends and collections made on time!
That’s where you want to be and where I want to see you at.
It’s fairly obvious which example you should be emulating when starting your own law firm. By establishing best billing practices right out of the gate, you will streamline yourself for greater success in the most efficient way possible.
In the next article I will outline some of the more practical steps, tools and resources you can use to do just that.
See you then!