Pros & Cons Of Billing Finance Charges
How you handle clients who struggle to pay your fees can make a big difference to whether or not your practice flourishes. What do you do with a client who just can’t come up with enough money to pay you right away? Someone might need 60 or 90 days or even longer to settle up an account. If you agree to give the client some leeway, legal software programs such as Easy TimeBill make calculating finance charges simple. But should you add them at all?
If you give clients more than 30 days to pay their accounts, you are effectively turning yourself into a lender. Lenders bill finance charges to compensate for the fact that tomorrow’s dollars are worth less than today’s, to make up for the risk they take by waiting for their money, and frankly as an annoyance fee to motivate clients to pay more quickly and save themselves money.
On the other hand, finance charges can hurt a healthy attorney-client relationship. Attorneys who deal with divorce financial settlement, real estate transactions and certain other personal matters develop a different kind of relationship with clients than, say, a corporate attorney would. This rapport can work in the attorney’s favor as the happy client refers friends in similar situations the practice. But it can also cause clients to react more negatively to business matters like finance charges.
Imagine someone who’s gone through a difficult divorce financial settlement, a transition that is both personally and financially difficult. The client is already under a lot of stress, and then the attorney starts tacking on charges for an outstanding account balance. The client may direct all that frustration towards the attorney and that will cost the practice future business from the client and from the client’s friends and family.
Even the best legal software can’t offer a clear “right” answer to this issue. Some attorney’s bill finance charges while others don’t. Some insist on full payment before handling a case. Others use outside financing agencies so they don’t have to carry the debt. If you do decide to bill finance charges, even if only on certain cases, you need law office billing software with the option already built in.
Easy TimeBill automatically calculates finance charges on outstanding invoices. You can add the fees on a case-by-case basis, or set up the program to add charges to all accounts older than a certain age. You tell the law office management software the rate and grace period, and then it looks at the payment history and the age of the charges and adds the right finance charge to the next invoice.
Whether you bill finance charges or not, you need law office billing software designed to meet the needs of a modern legal practice. Check out Easy Soft legal software programs and let us handle the boring administrative tasks while you focus on practicing law.