The check may be in the mail, but it’s not revenue until it’s in the bank.
And checks may not be your clients’ preferred payment method. Individuals strongly prefer electronic payments, and business-to-business (B2B) ACH payments are growing fast.
But the biggest benefit accepting electronic payments might offer? A faster revenue cycle. When payments come in faster and clear faster, attorneys can collect more with less effort. Back office staff can spend less time monitoring invoices and aging AR reports. Stronger cash flow benefits the whole firm.
Physical checks add friction to your revenue cycle
At nearly every stage of the payment process, handling checks requires time and labor:
- Waiting for checks to arrive in the mail.
- Sorting mail in the mailroom and delivering it to the accounting department.
- Physically opening, inspecting, and endorsing the checks.
- Depositing the checks electronically or by hand.
- Monitoring the check-clearing process (2-7 business days) before using funds to avoid trust accounting problems.
- Handling problems with returned checks and check fraud.
- Correcting data entry errors. Check data is usually entered by hand, which creates opportunities for human error.
Integrated electronic payments can speed up the revenue cycle
Here’s how electronic payments might work in your billing workflow:
- You send bills by email. A payment link is embedded in the invoice.
- Clients choose how to pay: physical check, ACH, credit card, or debit card.
- Clients who choose to pay electronically can do so in just a few clicks, without writing a check, preparing an envelope, or mailing it.
- Electronic payments are usually processed in 1-3 business days.
Individuals have long preferred electronic payments to checks. From 2016 to 2023, the percentage of payments made via check fell from 7% to 3%, while electronic payments rose from 55% to 75%.
B2B ACH payments are “the ACH Network’s fastest-growing segment” at 11% growth year-over-year. From 2016 to 2024, the volume of B2B ACH payments rose from $3.08B to $7.35B.
Concerns and facts about electronic payments
Law firms have unique obligations to the public, and are understandably cautious about making changes. Let’s explore the top concerns law firms have about accepting electronic payments.
Concern: It’s an ethical violation
Most jurisdictions allow law firms to accept electronic payments, and also to pass on electronic payment fees to clients (“surcharging”) if desired. Make sure to check local ethical rules and state laws in your area, including rules about surcharges, advance payments, and recurring charges.
It’s also critical to ensure that your electronic payment platform can comply with trust accounting and IOLTA rules. If it doesn’t distinguish between trust and operating accounts, for instance, there’s a risk that chargebacks or fees could be deducted from trust accounts.
Fact: Accepting credit cards, by itself, is likely not an ethical violation. It’s important to know your jurisdiction’s ethical rules and laws so you can assess whether payment platforms you’re considering comply with them.
Concern: It’s too expensive
If you’ve never quantified the cost of processing physical checks, paying a fee for every transaction might seem like an easy “no.” But consider your costs holistically.
In 2023, the Association for Financial Professionals found that the median cost of receiving paper checks was $1-2 per check. The same study reported that, among the 73% of respondents transitioning their B2B payments from checks to electronic payments, 85% were doing so to reduce their costs.
Firms should also take into account the time value of money and the benefits of a faster revenue cycle. Making it easier for clients to pay bills could also boost collection totals and reduce attorney time spent collecting on bills.
Fact: Electronic payments aren’t necessarily more expensive. It may be helpful to quantify all the costs of your current process. Surcharging can help offset costs.*
*Surcharging laws vary by state, and are subject to change. Always check with your local bar association for the most updated information.
Concern: It’s not secure
It’s true that law firms are ethically obligated to do due diligence before adopting new technology. Firms that don’t also risk reputational damage and liability if problems occur, like data breaches. But that’s the case with every technology product and technology-related practice at the firm.
With thorough due diligence and careful vendor selection, firms can get the benefits of electronic payments while limiting the risks. Law firms are also frequent targets of check fraud, and accepting electronic payments can remove some of that risk.
Fact: Security depends on the platform, and firms can alleviate some concerns by adopting secure online payment processing.
Orion ePay was built for firms like yours
Law firms need systems that meet their special needs. As you assess the costs and risks of your current systems, we can help you explore how Orion ePay provides considerable benefits. For some firms, especially large insurance defense firms, electronic payments aren’t common enough (yet) to justify making a change. But the growth of e-payments due to client demand and security benefits shouldn’t be ignored.
Ready to learn more? Demo Orion ePay for your firm.