Headnote CEO Sarah Schaaf recently appeared on the Legal Talk Network’s Legal Toolkit Podcast with Jared Correia.
The conversation covered a lot of ground, primarily focusing on the important yet often frustrating discipline of AR and collections.
You can listen to the full interview here.
Or for the quick version, here are some of the major takeaways.
Successful Payment Collection is More than Going Electronic
For many law firms, accepting payments online is a major step forward. However, an ideal accounts receivable process is more than just accepting credit cards.
Law firms also have to keep in mind ethical requirements for trust accounting. Many credit card processing companies that are not specific to law firms will only deposit money into one bank account. This means usually money will go into your operating account, even retainers that have not been earned yet.
It’s important to use a payments system – like Headnote – that allows you to designate for the money to go to operating or trust.
E-Checks are a Solid Option for Law Firms
In addition to taking payments via credit cards, law firms can gain simplicity and peace of mind in payments by offering e-check payments.
As Schaaf says in the interview:
“The reason that the eCheck is so important is because if you are a law firm that has SMB clients, not just individual clients, a lot of them are not going to want to pay with credit cards. Small companies want to pay directly from their bank. And so you need to be offering them a direct bank to bank payment method that doesn’t make them login and create a wire.”
Sarah Schaaf
See how Headnote handles E-Checks here.
The Importance of Speed
For law firms, payments is about getting the money you’ve earned and also about how quickly you get that money.
The sooner it’s in your bank account, the more flexibility you have to make decisions and the less time you are wasting on following up.
As Schaaf says in the interview:
“Statistics from the ABA and Clio Legal Trends Report are showing that lawyers are only collecting 86 cents on the dollar that you billed and average payment time is 60 to 90 days. And what we actually have found is that the rate of actually getting paid period goes down to 22% after 90 days, like that your chances of collecting are really low and that’s when you start discounting.”
Sarah Schaaf
By making it easy to pay electronically you are able to get the cash quickly. This reduces significant headache and also ensures you get the money. For law firms who push back on fees for accepting these transactions, the data shows clearly you’ll make a lot more money by making it simple for clients to make payments.
Ready to streamline your Accounts Receivable and increase cashflow in your law firm? Schedule a Demo here to learn more about how Headnote works.
Approach The Bench 