Quantcast

Changing the Billing Paradigm – Part 3: The Month End Dilemma

By on June 12, 2011

Law firms can improve cash flow and increase profitability if they improve their billing process and practices.

 The client billing process, in many firms is based on a slow, painful monthly schedule. Why … because it’s always been that way. In part 1 of this series we identified the nine (9) current painful and costly steps to client billing. In this posting we’ll discuss the Month End process.

 Why do firms have a “month end” process, the same reasons most other businesses do, it’s a convenient segmented time period to measure financial performance. However, from a billing point of view it really doesn’t mean very much. Firms operate on a cash basis, billing as such does not have any significance unto itself. Yes, I understand, without billing you probably won’t have cash.

Here is how to improve cash flow and profitability regarding the Month End process:

  1. A firm may have clients that specify an exact billing cycle, fine, but the rest of the clients might be billed on a firm developed billing cycle. Bill continually through the month, make billing a process, not an event.
  2. If you have a really active matter, see if you can bill twice a month. The sooner you bill, the sooner you’ll get paid.
  3. Ask corporate clients when they would like to get bills, this might sound strange, but CEO’s want to know their expenses as early in a month as possible. Getting a large legal bill on the 25th of the month might be a killer, getting it on the 10th won’t be as bad.
  4. A firm might find that continually billing through the month is a way to reduce staff. It’s not unusual for a law firm to have billing staff “less than productive” when they are not billing. These same people are all stressed out during peak billing days. Smooth out the workflow.
  5. If a matter closes, bill it immediately. Get all the time and cost recorder and bill it, regardless of the billing cycle.

 In summary, don’t tie the accounting period month end process to billing, bill continually throughout the month.

 In the next post we’ll look at dealing with attorneys who don’t have their time in, why is it a problem and what can you do to improve the process and become more profitable.

Comments (0)
Categories: AFA - alternative fee arrangement, Best Practices, Financial Management, Law firm billing

Scrub Bills to Substantially Reduce Write-off’s

By on January 2, 2011

Corporate clients have imposed daunting billing requirements on their outside law firms. These clients spend hundreds of millions on legal expenses and if they can reduce these expenses by 2-3% consistently, they save a ton of money. These clients have learned that complex billing requirements force law firms to write-off millions instead of dealing with all the appeals, delays and frustrations.

 Firms already spend a great deal of time (read cost) proof reading bills by billing specialists before sending them out. This manual process delays cash and at the end of the day costs firms a lot of money. Even after manual proof reading, the rejections still come and the specialists are back at it again, appealing, re-billing or in many cases just taking substantial write-off’s.

 So, how can law firm’s deal with this growing problem? By utilizing a Bill Scrubber™.

 New technology developments provide a way to “scrub” client bills prior to submission to insure they meet client requirements. A Bill Scrubber checks each bill for a series of client rules and points out time and cost entries that need “help” prior to submitting the bill.

 Firms using this new technology will make it harder for clients to reject bills or short pay because of not following the billing guidelines. The use of scrubbing technology will also identify clients with more difficult rules and additional training requirements that might be needed within the firm to reduce the billing violations.

 Bill scrubbing will make money for a firm and improve adherence to client guidelines.


Bill Scrubber is a registered Trademark of Rainmaker Software, Inc.

Comments (0)
Categories: Best Practices, Financial Management, Law firm billing, Productivity, The Legal Market

Have “dirty bills” …. just scrub them.

By on October 31, 2010

I asked law firms to send me copies of billing rejection notices; I wanted to see firsthand why corporate clients were rejecting bills, specific entries or withholding payments. And boy, did I get the copies, it is almost staggering. As you might imagine, the more rules, the more rejections.

 So, how do law firms deal with the ever expanding list of do’s and don’t? They spend a great deal of time, read cost proof reading bills by billing specialists before sending them out. This manual process delays billing, delays cash and at the end of the day, costs both firms and clients a lot of money. Even after manual proof reading, the rejections still come and the specialists are back at it again, appealing, re-billing or in many cases just taking substantial write-off’s.

 So, how can law firm’s deal with “dirty bills” just use a scrubber!

 New technology developments provide a way to “scrub” client bills prior to submission to insure they meet client requirements. Bill “scrubbing” checks each bill for a series of client rules and points out time and cost entries that need “help” prior to submitting the bill. Firms using this new technology will make it harder for clients to reject bills or short pay because of not following the billing guidelines.

Comments (0)
Categories: Best Practices, Financial Management, Law firm billing, Technology

Please send me my legal bill …. quickly!

By on October 17, 2010

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:

  1. Billing dept. announces the deadline for time entries, maybe the 2-4thday of the following month.
  2. Print and distribute the pre-bills.
  3. Attorneys review the pre-bill, mark it up with changes.
  4. Attorney dictates to the secretary a cover letter (firms think clients want a nice polite letter with their bills).
  5. Billing enters the bill changes.
  6. 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.



Comments (0)
Categories: Best Practices, Financial Management, Law firm billing, Productivity, Technology, The Legal Market

Mid-size Firm Managing Partner’s – Poor View of Technology

By on July 7, 2010

I was a little shocked to see the Hildebrandt story on how a dozen managing partners felt about their technology investments. Their perspective was they just wanted to make sure the network was reliable and maintained at a reasonable cost.  We don’t know all the details of the discussions that took place with the partners but one thing is certain, “they are missing the boat.” One of two possibilities come to mind, either the partners just couldn’t articulate the benefits of the technology the firm actually uses beyond stable networks, or their firms really don’t use technology for much more than email, document storage and a few legal software applications.

Technology can be a game changer for a mid-size firm, here are some examples:

  • Business Development – without a good contact management system (other than just Outlook) it’s just not possible to manage relationships and track the effectiveness of marketing campaigns.
  • Business Process Improvement (BPI) – business processes used by firms may not have changed very much in the last 10-20 years. Most of these processes are manual, paper based systems, for example, new client/matter intake, requesting a check, requesting a vacation day etc. These are just ripe for cost reductions and improvements in service.
  • Attorney Dashboards – at a glance, how am I doing compared to the requirements? Am I missing time for a certain day, do I have excessive client un-billed costs aging over 60 days, is my billing realization dropping below 95 percent? Attorneys need on-demand access to hard-hitting performance related information, gone are the days of sending out reporting packages (aka, paper).
  • Green Billing – stop sending your corporate clients paper bills, they don’t want paper. Green billing allows your firm to send clients a digitized bill, ready to be immediately imported into their in-house system for processing and approval. Happier clients and faster payment cycles is a win-win for both parties.  

Of course, the list could go on and on, the overall message is that when the managing partner can say that technology is being used by the firm as a strategic advantage in the marketplace his firm will be in a much better position to compete and quite possibly more profitable.

Comments (0)
Categories: Best Practices, Productivity, Technology, The Legal Market
Gallery
ist2_11425109-business-woman-with-colleagues-at-the-back ist2_7730216-library-tables ist2_5516813-business-people-joining-their-hands
Blogroll
Follow RainMaker