Linda Artesani shows bookkeepers how to help law firms collect unpaid invoices by setting up proper tracking in QuickBooks or Xero, documenting client communications, and automating payment reminders. Attorneys often neglect AR, so a bookkeeper who cleans up legacy invoices can recover significant hidden revenue.
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Hi there, Linda Artesani from the Accountants Law Lab. This week, as promised, we were gonna talk about how to have some good tips on working with clients with accounts receivables. So law firms are notorious about not collecting on their open AR. You would think, like I did, I thought when I got into this working exclusively with attorneys that they'd be really great at it. They could send out the scary letter and they would get paid. But they're actually terrible at it. They don't follow up, they don't stick with it, they don't check it. You might find you might get a client that's got $1 million in open AR and they've not done any work on it. And that's your opportunity as a bookkeeper to dive in and really help them learn ways for you. Maybe you can step in and help them collect it. They don't like to make that phone call. They don't want to— they've had an intimate conversation or intimate relationship with the client and they don't want to be that person calling asking for money. This is where we can step in as that outside service. So the first thing, first tip is really you want to create an organized system of tracking the accounts receivable. So you want to have software, obviously you want to have QuickBooks or Xero, something of that ilk to track the accounting. It's really important in today's world. You don't want to be using spreadsheets. I still can't believe I run into attorneys that do all their work on a spreadsheet, but they're there. help them organize, help them get inside the platform. Something like QuickBooks Online Advanced will do so much of the legwork for you so you don't have to really pay a lot of attention. If you're moving them from software to software, you can actually set it up so that you enter all that open AR. You want to enter all those details. Even if you're starting on the first of the year, you want to open all the back open entries. So you're going to be able to track it. So when a client pays a partial or whatever, you can apply it to that invoice. You don't want to just put an opening balance in. That's not a great practice. So you want to create that organized system, and using the software is going to help you follow up, and you'll see right there in front of you what's open. Maybe you can start talking to the attorney about sending statements to remind this, you know, the— any of their, their clients that they still owe. You can send reminders. There's all sorts of things you can do right inside of QuickBooks, and you want to properly document All the communication with the client, especially when you start collecting. It's really important to do in case it ends up down the road where they have to go to a collection company. You want to be able to properly document every email, every promise, mispromise, or whatever. You want to have all of that documented. If you get a phone call, you want to document it. Any form of communication, a text, you want to snip it, take a picture of it, keep it inside that client's folder or information. If you're using Clio, you can put it right inside of Clio and keep it there for keeping a good set of records for when you go further in the collection process if you have to. And then you want to accurately report and bill your legal fees. So no fees should get billed before the work is done. That's the biggest thing. So timing is everything when it comes to law firm accounting. And you want to make sure that there's a good clear understanding of how the billing is going to happen with the client. And that's gonna really be something that comes from the attorney. So whatever their engagement is with the client, as the bookkeeper, you wanna have that, you wanna read it, you wanna understand how that works with the client. You want to really utilize the software, the billing software to its maximum use. So if you're using a LeanLaw, you're using a Clio, you have that at your fingertips to kind of follow the path of when things were invoiced, when trust monies were applied. And if there's a balance left over, you want to be able to document that for the, for the attorney's client. It's really important. Now, there's a feature inside of QuickBooks Online Advanced called workflows, and I can tell you it is a time saver big time. You can set up settings to track the accounts receivable if you send out invoices on the 1st for the prior month. And they're due on the 15th. If you wanna send a reminder on the 15th, 'cause sometimes emails get lost, just saying, hey, this is due today, don't forget to pay it. You can create that setting inside of QuickBooks. And then you can also do a follow-up maybe on the 20th or the 30th. This hasn't been paid as another reminder. And you can even set up another reminder. That's inside of Work— workflows. It's a feature in QuickBooks. It is automated. You can put in all sorts of conditions, like if it's under a dollar, you'd wanna be hounding a client for under a dollar. But you can put those things in. Under $10, whatever the attorney wants. You can formulate the language and you can automate it so it can actually track it and send those things out automatically and you don't have to do anything. So it's a really invaluable feature, big time saver. Make sure that you set it up so that you can see who's getting sent these. Don't set up the automated feature unless you feel comfortable with that. And in the article that's attached here, you're gonna find the details on how to make those workflows. It's very important. And then you wanna make sure, lastly, that you stay on top of any rules or regulations regarding collections. You want to stay on top of any rules around accounts receivable in the state that your client is working and billing. So if you are a cloud accountant, you could be working with people all over the country. It's important that you track and know the laws around that. Your attorney should know it as well. You might wanna discuss what you plan to do and then have that open dialogue with your client. But it's very, very important to make sure that you know the rules around credit and checking and collecting and how you follow up. It's very, very important. And then create that organized system for tracking the accounts receivable, accurately recording it and billing the fees, and then making sure that you have automated processes to save time in collection. If you start to bring in all that old AR that's been sitting on their books for a long time, as that new bookkeeper, you are the hero to to your client because you've helped them bring in money that they did not even know or didn't think they'd ever be able to collect on. So this is a topic that we talk about in the Accountants Law Lab with our mastermind group. We got lots of great minds there. You could have one attorney client, none, but you're interested. It doesn't matter. We would be more than welcome— welcoming to you all to come into our group. We also have a course on Fast Track Your Accounting, uh, legal accounting if you wanna learn there. It's also on the website. And I hope you stay in touch, subscribe and follow us for more. And on that note, I hope you all have a wonderful week. Bye now.
