4 Quick Tips on Setting up a Law Firm's Accounts Payable and Receivable
When it comes to your legal billing software, there are endless options available. Which one do you choose? For many, it can be overwhelming looking at all the features each software has to offer, so it’s best to start with one that has all the necessary tools to run your accounts payable and receivable process smoothly. Here are four quick tips on setting up your accounts payable and receivable using one of these legal billing software programs.
1) Start with Easy Legal Billing Software
This is an oft-overlooked business expense—but it shouldn’t be. Legal billing software makes creating, sending, receiving, tracking and managing your invoices simple. And when you choose easy legal billing software, you don’t have to worry about hiring additional staff to manage these tasks—saving you time (and money) in the long run. A good billing program allows you to get paid faster while also providing accountability for any funds owed. When setting up accounts payable and receivable, it’s vital that you ensure there are detailed records of who owes what to whom. Haphazard accounting will only create confusion as debts are settled, so start with legal billing software that tracks each invoice throughout its lifecycle.
2) Establish an Accounts Payable System
No matter how small your law firm is, you should set up an accounts payable system. As you establish your business, you will discover that it’s easy to miss invoice deadlines when things get busy. By keeping all of your invoices in one place, establishing your accounts payable system can make it easier for you to stay organized while ensuring nothing falls through the cracks. This guide will provide insight into what you need to consider when setting up an accounts payable process. For example, you should decide whether or not you want to hire someone within your company to take care of invoicing or handle payments outside of your business structure. Establishing accounts payable system will also help streamline future legal operations. If any questions arise at any point during payment procedures, having an established account pays receivable center can be useful when evaluating issues or concerns specific to each job or client obligation; furthermore, organizations usually feel more comfortable working with firms who have efficient practices related to their AP cycle.
3) Create a Dedicated AP/AR Department
If you’re running your law firm by yourself, then an alternative is to create a separate department—usually led by one of your senior-most staff members—that handles all of your AP/AR functions. This department may need to hire new employees or bring in freelancers to help manage its workload, but it can be beneficial if you don’t have an interest in (or bandwidth for) handling these issues yourself. It makes good business sense, too: establishing clearer lines of communication between finance and legal departments results in better overall workflow and less chaos.
When hiring employees for your AP/AR department, make sure they fit with your company culture. You want people who are detail-oriented enough to pay close attention to invoices as they come through, ensuring accuracy down to every penny; you also want team members who are comfortable working together toward a common goal with other departments.
4) Manage Your Staff Responsibilities
When you take on staff members, make sure you have a formal agreement that lays out their responsibilities in one place. And if you’re still using spreadsheets to manage your accounts payable or receivable, it’s time to upgrade to a legal billing software solution. Be sure to choose an easy-to-use solution with simple invoice templates and tools like accounting estimates, online expense tracking and payment terms. This will ensure you keep things organized as your team grows over time.
CONCLUSION
Regardless of how large or small your law firm is, having processes in place for AP & AR is essential. It’s much easier to set up an AP & AR process when your business is small; however, if you don’t already have one in place, now is as good
a time as any to consider putting one together. An easy legal billing system saves you time, gives clients more piece of mind and might even help you get paid faster. That could be just what your cash flow needs! Good luck with setting it all up!
