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Exchange • Spring 2015 > Leverage Business Development Premier

Firms Can't Deny Plastic's Impact on Cash Flow

By Justin Farmer, Sr. Director Product Management, Thomson Reuters Elite and Jay Bruber, CEO of Persolvent

It’s a fact: most clients today live on plastic. Yet in today’s increasingly cashless society, many law firms still grapple with technical, financial, and other factors concerning the decision to accept credit or debit card payments for earned and unearned fees.

Although transactional fees, security standards, and implementation logistics should be practical considerations when evaluating payment processing technology, they are far outweighed by the benefits associated with accepting electronic payments, making it a savvy and strategic business decision.

Perhaps the greatest reason why credit cards are gaining momentum in the legal industry is because their transactions process much more quickly than traditional methods of payment. A firm that accepts credit card payments typically sees funds deposited within 48 hours, as opposed to waiting several weeks, or even months, to receive a check in the mail.

Unpaid invoices can have a serious impact on a firm’s bottom line, as well as its overall financial performance. It is an unfortunate reality that invoices that go unpaid for 180 days or more are far less likely to be paid in full.

According to Thomson Reuters Peer Monitor, 2014 had the lowest collected realization rate ever recorded. Last year, firms collected an average of 83 cents for every dollar of standard time logged by their lawyers, as opposed to 92.7 cents in 2005. This near 10 percent drop in collected realization means that firms are now losing close to 10 more cents for every dollar projected in recorded time than they would have a decade ago.

While credit card processing fees do exist, they pale in comparison to the value of receiving near-immediate payment. By offering more convenient payment methods, firms increase their likeliness of getting paid in full and decrease their risk of invoice abandonment. To put it simply, the easier it is for clients to pay, the faster firms get paid.

Additionally, firms that offer credit card payment options differentiate themselves from the competition, gaining a crucial marketing advantage. Credit card payments can be easier for cash-strapped clients when access to liquid funds is unattainable. Furthermore, many clients are motivated to pay big ticket invoices via credit card to receive incentives offered by credit cards companies, such as miles, points, and cash back.

Yet another benefit of credit card transactions is that they enable automation, which is the cornerstone of helping businesses improve performance, lower costs, and drive operational efficiencies. Integrated payment processing software solutions, such as award-winning ClientPay, streamline receivables management by automatically updating client payment. Efficiencies to be gained include reduced data entry times, minimized risk of error, fewer trips to the bank to deposit checks, and more. Setting up a secure online payment portal makes it easy for clients to pay online, while also ensuring that their credit card information is safeguarded during and after each transaction.

Implementing automated credit card payment technology is proven to provide substantial benefits to both firms and their clients. Not only does it establish a convenient and secure means of processing payment, it enables firms to direct their receivables to the card-issuing banks, so they can stay focused on what matters most–managing clients’ legal matters.


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