Learn to increase the velocity of the money coming into your growing firm using e-payment technology
Cash flow is the life force of daily financial management in a growing firm. The lag between the time you collect
from your clients to the time you have to pay your suppliers and employees is every business’s cash flow management challenge. Let’s focus on incoming cash flow management, enabling anyone who owes you money to pay you in the most efficient manner, as rapidly as possible, received and converted to cash in the bank account,24x7x365.
Examine old unhealthy habits
Can you do better in your cash conversion from accounts receivable to cash-in- the-bank? You sure can!
And let’s introduce a new way of thinking about incoming cash flow: a “check-coming- in-the- mail” is not cash-in-
the-bank. That’s so last century! To make the latest cash flow thinking work for you, answer these questions about your current process of billing and receiving client payments:
Is it efficient? Could your time be used better than contacting clients for payment?
Is it effective? Could your process improve, rather than waiting for the payments to arrive by snailmail?
Is it laborious? Is it you, or do you have staff, processing paper payments?
Is it expensive? Do you track competitive pricing and do you fully understand your financial charges?
Is it improving? Is your payment process reviewed/measured to keep up with the latest tech improvements?
Review the past 500 years’ payment routine, each step costing a bit more in labor and opportunity costs, to receive
rendering a paper invoice
awaiting payment to be processed by the client
photocopying a check
completing a deposit slip
taking a check to the bank
waiting for the bank to convert a check to cash in your account
Join the 21 st century by leaving all this behind. The internet and online secure payment processing allows you to accept payments directly from the client’s keyboard, or for you to initiate a scheduled payment from your client. The originator of a payment may different from client to client but either way, no matter who initiates it, more efficiency results when you take the postal mail, back office paperwork and bank time out of the equation. Time is money!
Constriction of the cash flow arteries is curable
If you were paid for sales the instant you made them, you would never have a cash flow problem. Obviously, you are not a retailer, as in this example. But you can still improve your incoming cash flow by actively managing your clients and receivables. The basic idea is to improve the speed with which you turn invoices into cash-in- the-bank.
There are specific electronic techniques available to you:
Find a respected and well-referred online payment system to integrate to your website and accounting systems. Resist relying on the rates offered by your accounting software or your bank as they are often more expensive than the market rate for electronic payments.
Issue invoices promptly by email, with a link on the invoice to direct the client to pay you online.
Make it easy for a client to find the “Pay Now” button on your website. Mark your invoices clearly to call attention to the client’s ability to pay online by the due date.
Offer clients the ability to pay by debit or credit card, via a secure webpage (one whose URL starts with https://) that has the “look and feel” of your website and its branding.
Offer clients the additional ability to initiate payment on the electronic invoice from their checking accounts by e-check (also known as ACH); an ACH is far less expensive to you than a credit card payment.
All good e-payment systems follow up with an email receipt to the client, and simultaneously to you.
Allow clients to make scheduled retainer payments electronically on your website once they sign with you.
Or better yet, initiate the payment schedule yourself when on-boarding new retainer clients. State the payment terms (dates, amounts and method of payment) in the contract that allows you to initiate electronic payments on them, to be followed immediately by an email receipt with a business-like thank you for their payment.
Ensure clients are comfortable with your electronic payment process and be firm about this being your standard
procedure, as they are likely to be already engaging with other professionals and their own customers similarly. Track successful recurring payments to identify and avoid changes in credit card numbers and keep the payment
stream consistent and timely.
Even the playing field
Clients who insist on paper-based invoices and paper checks create an unequal relationship with you. You should
be paid soon after services are rendered, not 30 days (or even more!) after. Your time spent in practice of the lawon their behalf must match the price and timeliness of the clients’ payment delivery. They should respect you for this.
Operating a law firm is a business. It is your promise to provide expert and complete service according to the client’s expectation. In turn, you are deserving of payment upon delivery of your professional knowledge, so it’s incumbent on you to use today’s e-payment technologies to make the attorney-client payment relationship an economic success.
Velocity of cash-in- the-bank for the work you perform is an achievable goal with the right e-payment
©2017 Marc W. Halpert, Cash Flow and e-Payment Professional, Your Best Interest LLC
PS Great advice, right? I’d add that hiring a virtual assistant to do the follow up for you is a great interim solution if you’re too busy or don’t want to do it. You can find a Virtual Assistant Outsourcing Plan here