Improve Your Cash Flow Without Adding Clients – Strive to Bill on Time (Part 1 of 2)

The impact of perhaps the most simplest and straightforward billing practice of all – sending out timely bills, is often overlooked and underestimated by law firms.

Failing to send out bills on time can be one of the most costly aspects of practice. It can contribute to all kinds of practical problems, from firm-related operational issues to client communication troubles.

Billing clients on time, particularly clients who are paying you based on an hourly rate, is a function of several factors. It’s part timekeeping and part accounting and administrative skill with a bit of marketing and psychology. Each element impacts how quickly your bill gets out the door and, often, how quickly the bill is paid.

As to actual bill content, a few things are pretty clear. Regardless of the billing method, the bill ought convey a solid representation of the value delivered. When the client sees it, there should be some instant recognition of progress made or (ideally) a problem solved or avoided. Avoiding jargon, staying away from block billing (lumping tasks together into one huge paragraph of “review file; call client; schedule hearing; legal research”, etc.) are also good ideas and worthy of independent discussion. However, of equal importance is getting in the habit of sending out regular, timely bills. Like clockwork.

Why is it so difficult to do? Why do so many firms fall down when it comes to billing? There are a few reasons.

Failing to get a bill out the door can ultimately be attributed to several things, but one factor is usually the primary culprit: bills are often tied to time sheets, and time sheets can be a pain in the neck. Without a convenient time and billing productivity tool, when there are fifteen things on your desk that each have hard deadlines attached, it’s easy to put timesheets at the bottom of the pile.

Working on time sheets is certainly no fun, and other priorities are often a convenient, reasonable rationale for procrastination. However, in the long run, it’s bad for everyone. So, step #1 in the process of getting bills out on time is to simply your life and get a convenient, reliable time-and-billing solution that works best for you. With today’s tested, inexpensive, web-accessible technology, there’s no reason why timekeeping can’t be a pretty simple activity.

(Note: we’re biased toward Rocket Matter’s own “Bill As You Work” functionality, which makes timekeeping a passive outcome rather than an active task, but there are many options available.)

In addition to challenges faced with timekeeping, timely bills are also held up on occasion by the subtle -but undoubtedly real – psychological aversion some lawyers have to asking for payment. Sometimes, the same lawyer who can vigorously argue on behalf of her client for money damages or aggressively negotiate a multi-million dollar asset purchase, can periodically hesitate in asking for their own, well-earned fees.

Asking for payment can sometimes feel, well, un-lawyerlike – almost as though that ought be someone else’s department. Lawyers handle the lawyering – someone else takes care of the bills. Unfortunately, many just don’t have the staff or resources to draw those distinctions and, even when separate personnel exist to handle some of the administrative matters associated with billing, the process is often still heavily lawyer supervised. Hesitation can lead to delay, and delay is virtually always a bad thing.

In some ways, sitting on unbilled time can be the equivalent of hiding under the bed and hoping tomorrow’s physics test will just … go away by itself. The billing process is wrongly viewed as a confrontation, instead of a very normal and expected part of the relationship. To a large degree, it’s a check on how well you’re communicating regularly with your client. Ideally, the client should never be surprised by the bill you’re about to send – there should be enough advance agreement and continual communication in the process to ensure everyone has a good handle on how things are progressing.

But wait! There’s more! In part two we explore more hurdles to getting your bills out on time and what you can do about it.