April 8, 2005
Billing through the twenty-fifth
Why wait until the end of the month to start your billing process. Your billing period can just as easily be the 16th through the 15th of every month or, my preference, the 26th through the 25th of each month.
The typical law office has a 7- to 10-day bill preparation cycle. If you bill through month end, it may be the 15th of the next month before the bill actually gets in your clients’ hands. Individuals typically pay their bill once a month and a lot of small businesses pay on the 10th or 25th of the month. By changing the monthly bill period, you can improve the chances that your bill will be included in the next check writing session.
And wouldn’t it be nice if all the month-end crunches we have to go through were spread a little more evenly across each month? Why focus everything on the month end time. There is nothing written in stone that says your billing period has to be the natural calendar month.
Come to think of it, there is nothing that says you can’t bill every two weeks. You know the old 80% rule, 80% of your fee revenue is likely to come from only 20% of your active matters, why not bill that 20% every two weeks. Think about it.
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Filed under Cash Flow Issues by Tom Collins