While positive cash flow has always been important for law firms, it has become a growing issue in the wake of COVID-19 lockdowns and restrictions. With the financials of so many businesses impacted by nationwide shutdowns, travel restrictions and changing consumer behaviours, it’s likely many of your clients are feeling the pinch, and this can result in delayed payments or even inability to access your services. Here are four tips to improve your cash flow and even widen your client base in the process.
#1 Review your current position and processes
If you are not across the details of your actual financial position and current cash flow, you aren’t alone. It’s not uncommon, particularly in smaller practices that don’t have in-house admin and accounts staff, but you do need to rectify it.
Administration can be a headache and impact your billable hours. So, it can be worth investing in a technology solution to manage incomings and outgoings better, so you can plan for a healthy cash flow.
#2 Offer your clients flexible payment options
With many businesses taking a conservative approach to finances as we navigate life with COVID-19, managing upfront fees and lump-sum payments can be challenging. While your advice may be the best investment they can make, it leaves both of you in a difficult situation if they can’t afford it right now.
One strategy to help your clients pay you on time and smooth out their cash flow is to offer them the opportunity to leverage your expertise when it’s needed most and pay later. While you can offer in-house payment plans, these can become onerous to manage, creating additional costs and administration.
Selectpay’s business-to-business Buy Now, Pay Later (BNPL) solution allows you to offer favourable and flexible payment terms while you get paid upfront. Even better, it doesn’t cost you anything or take any resources from your business, so you can focus on increasing billing hours and growing your business.
#3 Manage your overheads
In today’s landscape, many commercial suppliers are offering flexible terms or better deals as remote and hybrid working changes the game. So, from your rent to your office equipment and utilities, now is a great time to negotiate with suppliers.
And if any of those costs are impacting your cash flow or coming in at a time when turnover is lower, you may want to consider using BNPL for your own invoices. Many Selectpay partners choose to offer BNPL to their clients while also using it to manage their own costs – it’s a real win/win that manages cash flow on both sides of the equation.
#4 Consider invoice financing options
If continued late payments are impacting your cash flow, it’s worth taking a deeper look at why. But in some cases, it is the nature of doing business with particular clients. Due to convoluted payment systems or internal cash flow management processes, some organisations will regularly pay invoices late.
Whether you choose to continue working with these clients is down to several factors, from the size of the account to the depth of relationship or potential network impacts. However, in many cases, it will make sense to continue working with these clients.
One option you can consider here is invoice financing, whereby you receive a percentage of your invoice upfront, and the client still pays to your standard terms. There is no difference for your clients, but you’ll have access to the cash faster, so you can focus your time on building your business.
If you are interested in getting paid faster and better managing cash flow in the legal industry, get in touch. The Selectpay team can help you with a hassle-free solution tailored to your firm’s needs.