Does your firm accept credit cards? Many firms feel that they are not willing to pay the fees associated with accepting credit cards, but the benefits may outweigh the costs.
When you accept credit cards you can get paid faster. There is no need to wait for someone to cut a check and put it in the mail, and there is no chance of it getting lost in the mail. I know firms where bills are sent out and they get payments the same day.
If someone is having cash flow issues, accepting credit cards means you can get paid immediately and the person can pay over-time through their credit card. While we do not encourage clients to incur debt, this is a way to avoid your firm having to provide financing to clients.
In this period of Covid-19 many companies are spending less time in the office. If your bills are delivered via email they can be reviewed even when no one is in the office. If you can accept payment by credit card you do not have to wait until someone goes into the office to create and print checks and then possibly wait until the authorized signer comes to the office.
If your billing software offers a link to your merchant service account (credit card processing company), you can include a payment link in the email you send with your bills. When your customer pays, the receipt is recorded in the system. This minimizes processing by your staff, freeing them up for other work. Another benefit is the reduced opportunity for theft. We hope that all employees are honest but there have been cases of bookkeepers stealing payment checks. If the money goes directly into your account, there’s no opportunity for this type of fraud.
Another benefit of accepting payment by credit card is that you can setup automatic payment for regular billing or for retainers. This means you do not have to wait for the client to take action in order to be paid. Just make sure you have proper forms filled out to authorize this charge. You can find examples of language for this and other situations at: https://supportcenter.lawpay.com/hc/en-us/articles/360029513072-How-to-add-credit-card-language-to-your-attorney-fee-agreements
If you are going to accept payment from a third-party, like your client’s uncle perhaps, you want to make sure you have them sign a “User of Authorize third-party credit card”. Without this, if the uncle disputes the charge, you may have a hard time disputing as the uncle is not considered to have received a benefit from the charge. Proper paperwork prevents the problem. The link above also has language for this form.
Firms often ask if they can charge a fee to those that use credit card to pay their bill. The answer is “it depends”. Some states and Bar Associations allow a fee, although it generally must be a fixed percentage, the same percentage for everyone regardless of type of card. In other states such fees are not allowed. If your local area allows a fee, you should include information in the fee agreement. You should also consider how your clients will feel about this and whether it might generate ill will. Getting a sense of what others in your local market are doing can be helpful.
One other thing to watch out for is accepting funds into your IOLTA account. While this is fine to do, you need to make sure that the credit card processing company you are using puts the money into the correct account. You should make sure that they are taking all processing fees out of the operating account, not the IOLTA account to avoid any problems with your IOLTA account. Choosing a merchant account processor that understands and works with law firms can help to avoid problems.
In summary, accepting credit cards can help you get paid faster and reduce collection issues. Shop carefully to get the best possible rates and the expense may well be worth the cost.