There are some fallacies some law firms may have when it comes to merchant processing. If you’re like most firms, you’ll probably say a merchant processing account enables you to accept major credit cards but perceive credit cards as being for retail, not for lawyers. Another fallacy is the idea that accepting online payments will make your practice more complicated. These are two misconceptions that could be costing your firm clients, adding unnecessary time and effort to your accounting and collection process, as well as decreasing your profit margins.
A recent study by the Federal Reserve revealed that 75.3% of all noncash payments are done with a debit or credit card as opposed to ACH or check payments¹. Another study published by the ABA may surprise you; it states that 40% of individuals who need legal assistance would not consider hiring a lawyer who doesn’t accept credit or debit cards.²
While accepting credit card payments is perceived as a convenience for your clients, suppose you were to discover that utilizing a merchant processor is actually more beneficial to your firm than it is to your clients. Having the right merchant processor can simplify your in-house accounting and collection process. More time can be devoted to clients, generating billable hours, rather than being bogged down by complicated and time-consuming accounting and collections.
Credit card processing does more than allow you to accept credit and debit cards:
- It is an automated acceptance and settlement process that allows transactions to be deposited directly into your law firm’s bank account.
- It puts an end to dealing with paper checks, bank deposits, bank runs, and paper invoices.
- Instead of waiting for checks to clear or 30 to 90 days for paid invoices, funds from credit or debit card transactions are deposited directly into your law firm’s bank account within 48 hours, enabling faster payment cycles.
- It allows for scheduled payment plans for clients who request having legal fees charged to their account. Having the ideal merchant account will enable you to accept ACH payments and debit your clients’ checking accounts on an ongoing schedule, automatically transferring the funds into your firm’s account.
Dealing with collections is time-consuming and certainly not cost-effective.
- Repeatedly calling delinquent clients and sending out written collection notices for unpaid bills waste time and money that could be applied more judiciously.
- In some instances, you may only be able to collect a partial payment, or worse, the client never pays, which results in a complete write-off. The amount of time spent was more costly than holding out for the full amount owed, and even a partial payment may not justify the time spent.
Accepting credit/debit cards and ACH payments means your clients don’t have to come up with a one-time amount of cash. It allows them to put the full amount owed on a card or make partial, regularly scheduled payments automatically deducted from their cards or ACH by the merchant processor and transferred directly into your firm’s account.
Clearly, there are advantages to streamlining your accounting and collections by utilizing a merchant processor’s services. Integrating your merchant processing account with QuickBooks or a similar accounting software and utilizing online reporting will cut down overhead and collection costs by more efficiently managing accounts receivables. Suppose you are considering adding the benefits of merchant processing to your law practice. In that case, there are many reliable companies to choose from, but not all specialize in law firms assuring you are compliant with the ways in which attorneys may accept credit cards.
To ensure compliance, select a processing company explicitly designed to meet the regulations of the legal industry. LexActum is one such company that offers law firms the ability to:
- Quickly set up a new merchant account. Applications are processed immediately.
- Administer deposits to trust and/or bank accounts.
- Receive payments quickly as card payments are deposited within 48 hours of the transaction.
For a free statement audit, or to get started, Call LexActum at 321-972-9838.
¹ The Federal Reserve – The 2019 Federal Reserve Payments Study
² American Bar Association – A Better Client Experience Through Online Payments