5 Easy Billing Tips to Increase Your Law Firm’s Profitability

Billing practices are often an overlooked area for law firms to optimize, but they directly impact profitability. By making a few adjustments to how your firm tracks time, invoices clients, and collects payments, you can streamline processes, reduce revenue leakage, and improve cash flow. Below are five actionable tips to help your law firm boost profitability through better billing practices.

1. Enter Time Daily and Finalize Weekly

Establish a firm policy that all billable and non-billable time is entered in real-time, or at the latest by the end of each day. Timekeepers should review and finalize their time entries by Monday of the following week.

Research shows that up to 15% of billable time is lost when it’s not recorded promptly. Anecdotal experience suggests the loss can be even higher. Late entries also risk overbilling, as timekeepers struggle to reconstruct their activities accurately.

In addition, full-time timekeepers should consistently account for at least 40 hours of work per week to ensure all time is being tracked and analyzed effectively.

Pro Tip: Use technology to make time tracking easy. Consider tools with mobile capabilities for on-the-go entries and automated reminders for compliance.

2. Create Accountability Measures for Timely Timekeeping

It’s one thing to set a policy for daily time entry, but enforcement is essential. Implement accountability measures so timekeepers understand the importance of compliance.

Some strategies include:

• Monthly reports showing compliance rates by individual.

• Incentives or recognition for those who consistently meet expectations.

• Including timekeeping habits as part of performance reviews.

Clear communication and consistent follow-through can make timely time entry a habit rather than a hassle.

3. Send All Bills by the 5th of Each Month

Timely billing is critical for healthy cash flow. Ensure all invoices for the prior month are sent no later than the 5th of the current month.

If your current billing process can’t meet this timeline, it’s a sign your systems or workflows need improvement. Evaluate whether bottlenecks exist in your processes or if your technology requires an upgrade.

Also, include a statement of account with every invoice. This helps clients see their outstanding balances clearly and reduces delays caused by misunderstandings about past due amounts.

4. Offer Electronic Payment Options

Clients want a seamless payment experience. Ensure every invoice includes electronic payment options such as ACH or credit card.

If your clients must mail checks, you’re increasing the likelihood of delays. With modern systems, you can often integrate payment links directly into your invoices for faster collection.

Bonus Tip: While electronic payment systems may incur small transaction fees, these are far outweighed by the reduction in aging accounts receivable and administrative costs.

5. Follow Up on Outstanding Invoices

Every month, dedicate the last two weeks to following up on clients who:

1. Didn’t receive an invoice or statement of account.

2. Have balances overdue by more than 60 days.

Your billing system should allow for automated reminders, but for balances over 60 days, a personal touch—such as a phone call or a separate email—can make all the difference. Prompt follow-ups keep overdue accounts from spiraling out of control.

A Small Investment for a Big Impact

Adopting these five billing tips may seem like a significant undertaking, but with the right systems and processes in place, you can make them seamless. The impact on your firm’s bottom line will be worth it—streamlined cash flow, reduced revenue leakage, and a healthier, more profitable firm.

For more billing tips or to explore how fractional COO services can help optimize your law firm’s operations, contact us for a free consultation.

Transform your billing. Transform your profits.