At least 75% of Americans have a credit card and that number is rising. If your law firm is only accepting cash, check, or money order for payment, you could be leading potential clients to your competition. More and more law firms are accepting credit cards and you should too.
People like to pay with credit cards:
Traditional banking has become a bit outmoded. Banks charge fees for checking accounts and people are looking to online banking for their day-to-day purchases. People enjoy the convenience of cashless transactions, the ability to see all your purchases on statements, and the ease of syncing transactions with financial software. Credit cards earn rewards incentives as well such as mileage or cash back. Your clients will love bragging that the miles they accrued from their divorce attorney’s invoice paid for their vacation!
Payment is more reliable:
Most clients won’t pay your bill in cash. If you don’t accept credit cards, you’ll be getting a lot of checks. Payment by check is unreliable. They take days to clear in the bank before the funds are released to you. Then if the check bounces, you are left with two problems. You have to pay the bounced check fee, and you have to track down your client for proper payment. Then you will have to force the client to pay via cash or money order since their previous method of payment was returned.
You can accept more clients:
Some people just do not have enough money to pay your fees at the time of invoicing. Paying with a credit card means they can spread the payments out over time, while you still receive all the money up front. Depending on your law specialty, this can help clients who will be coming into a settlement – they can then pay off their credit card bill after your case is over. Chances are also good that if a client is seeking your services, they are doing so because they have been wronged financially and will not have the cash at hand to pay you until you win the case.
You can simplify bookkeeping:
If you have a client that can’t pay their bill, you have limited options: send them to a collection agency, or allow them to pay in installments. Sending the unpaid invoice to collections means you only get a fraction of the amount owed and you can write off the loss on your taxes. Allowing the client to pay in installments is the preferable option, but creates a bookkeeping headache for you. You have to remember to send out the invoices at the agreed-upon intervals, monitor the payments, record them, and apply them to the correct client account. If the client misses a payment, you have to send a second or third notice. Then if they send in a payment, which invoice was it for? Do the invoices overlap?
A more desirable option would be to have the credit card company do the bookkeeping for you. A client can pay the amount in full up front if you have fixed-rate services. Or if you work out a payment plan with their credit card, you can set up automated debit so the card is automatically charged each month until the invoice is paid.
You can charge the credit card fees to the client:
When you pay for gas, some gas stations have two different prices listed: one for cash and one for credit. That’s because credit card companies charge retailers a processing fee. Most retailers absorb the fees in their cost of goods. As a law firm, you can pass that processing fee onto the client.
Employ a firm to do the accounting:
Now that you know the advantages of accepting credit cards, you’ll need to know how to handle them. It can become complicated for your financial statements. You’re dealing with trust accounts, and funding them through credit payments may be more bookkeeping than your law firm can handle. If you hire the right firm with legal accounting expertise, they can handle the setup of all of your transactions. Don’t guess and test your way through the process. Hire professionals. JADDE Financial Solutions will guide you through the complicated legal billing process.