Here’s a question for law firms … how fast should you bill your clients?
The answer …. quickly, as soon as possible.
No client looks forward to getting their monthly bill in the mail. However, if you are going to send me a bill this month I want it as early in the month as possible. Why? Because, businesses (unlike law firms operating on cash basis) must outright “expense” or “reserve” for this bill in the month they receive it. Well run businesses are running almost daily P&L’s and forecasting both expenses and cash flow on a continual basis throughout the month, quarter and year. So, why is this a problem? Law firms are poor at getting bills to their clients. The process is just slightly better than in the days of quill pens and the Pony Express.
Here’s the process:
- Billing dept. announces the deadline for time entries, maybe the 2-4thday of the following month.
- Print and distribute the pre-bills.
- Attorneys review the pre-bill, mark it up with changes.
- Attorney dictates to the secretary a cover letter (firms think clients want a nice polite letter with their bills).
- Billing enters the bill changes.
- Print the final bills, stuff the envelopes, apply postage … you get the idea.
It’s now the 28th of the month, and surprise ….. in the mail today is a whopping legal bill, far more than I expected. My forecast for this month’s profits just took an unexpected turn south and I only have a few days to recover and see if I can still make my forecast.
Message from Corporate Clients to Law Firms: Get me my bill as early in the month as possible, it will help me plan my expenses much better. BTW, law firms benefit from “fast billing”, you’ll get paid faster.