For Law Firm CFOs, a Million More in Revenue in Three-and-a-Half Days?
September 22, 2023
Law firm CFOs, managing partners, and firm leadership know all too well that ‘time is money.’ Billing clients doesn’t generate revenue; collections do. And the longer it takes to recover what the firm is due, the more likely write-offs become.
Speed of collection has become even more crucial in the past two years. Against the ever-present (and intensifying) imperative to grow revenue, law firms are in a bind. They have significantly higher overheads, thanks to a jump in lawyer salaries due to the ‘salary wars’ of the past two years. With inflation outpacing increases in firms’ billing rates, charging more is not a solution, and already-high utilisation rates preclude ‘utilising our way out of the problem.’
This leaves accelerating cash flow. Doing so pays off handsomely: for a firm with revenue of 100 million pounds, reducing time-to-payment by just three-and-a-half days (well, 3.649 days, to be precise) works out to a million pounds of additional revenue in this financial year.
With the average law firm lock-up being 140 days, this should be straightforward. Yet law firms find themselves caught in a never-ending cycle of reviewing and revising invoices in response to client pushback, resubmitting them, and doing whatever else is necessary to collect. These efforts may accelerate collections – but they also incur opportunity costs. As with all administrative tasks, time spent on collections means less focus on work that generates revenue. Moreover, the burden of cash flow management leaves CFOs with scant time to pursue strategic initiatives that, over the long haul, will make a bigger impact on revenue for years to come.
How to escape this conundrum? By doing what clients do in hiring a law firm: outsource the matter to experienced professionals with the expertise that comes from having handled such situations many times before. Enter the managed billing services provider.
The best providers offer a solution that combines optimised processes, economies of scale, integrated client intake, eBilling teams, and knowledgeable professionals who are otherwise hard to find and retain. The result is right-the-first-time invoices that dramatically reduce the time from generating invoices to securing client payment. The alternative is a homegrown, time-intensive approach that reinvents the wheel that a managed billing services provider already has, ready to go.
Moreover, using a managed billing services provider means more time for billable activities and spearheading strategic initiatives. With upwards of a million pounds (or dollars, euros, or anything else) in revenue to gain every three-and-a-half days, a managed billing services provider means money in the bank.
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