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Across all industries, financial transactions via electronic payments have been growing in popularity for a few decades. And the use of electronic signatures, one aspect of electronic document management, is also on the rise.
These two features are must-haves for law firms wanting to offer more convenience to clients. But they don’t just benefit clients. These electronic systems enable paperless accounts payable and receivable processes that makes paying vendors and invoicing clients easy and fast. They reduce risk, increase control, save money and improve visibility for law firms.
Here’s how they work and benefit your law firm:
ELECTRONIC PAYMENTS (ePayments)
ePayments are a way of making financial transactions online, rather than using cash or checks. By now, most people are acquainted with the most popular methods of electronic payments: credit cards, debit cards, virtual cards, wire transfers, and ACH (direct deposit, direct debit, and electronic checks).
Cost of Electronic Payments
Businesses in North America spend an estimated $510 billion in manual accounts payable costs, primarily because 60% or more of payments are still made by paper checks. Considering savings on paper, postage and manual labor, the cost of using an electronic payment system is typically less than traditional checks. (The average cost for each paper check transaction is $5, but ePayment can reduce processing costs by up to 80%) (Source)
Benefits of Electronic Payments
Convenience: Electronic payment systems are extremely convenient for both the payor and the payee, whether you’re talking about using it to invoice your clients, pay your vendors, or compensate your partners and attorneys.
Improved vendor processes: When paying vendors, the system strengthens supplier relationships and relieves staff’s manual processes through the consistency and speed of payment. Law firms also gain access to historical transaction data records, enabling managers to easily track and report on vendor expenses.
Improved client billing: This type of electronic payment is typically included with a legal management system and/or legal analytics solution. When invoicing clients, an ePayment system is known to increase payment rates, speed up remittance turnaround times, and can even automate reminders, freeing staff up from repeat invoicing. In fact, Clio data reports that 57% of electronic invoices get paid the same day they’re billed and 85% get paid within a week.(Source – https://www.clio.com/blog/lawyer-statistics/)
Streamlined payroll: Yet another type of electronic payments associated with your LMS is payroll. Along with legal analytics software, you can automate partner payments or attorney fee allocation in any configuration. Integrating this complex calculation with your payroll is worth the price of admission!
Security: While older generations may still believe traditional payment methods are safer, electronic payments are, in fact, far more secure. Virtual cards, free, single-use 16-digit numbers that are authorized for a specific payment amount, offer even greater protection.
Accuracy and analytics: Automating data typically reduces data entry errors. You also get comprehensive records that include payment statuses, metrics and audit trails for internal controls.
You can view a comprehensive breakdown of risks and rewards of each type of electronic payment and when you would want to use each one here.
ePayments has become a baseline expectation for clients and thus a competitive differentiator for law firms of every size. Convenience is key for keeping clients. If you aren’t already leveraging this technology, this should be a major goal for early 2022s.
ELECTRONIC DOCUMENT MANAGEMENT (eSignatures)
In 2000, the US’s Electronic Signatures in Global and National Commerce Act (ESIGN), in tandem with the Uniform Electronic Transactions Act (UETA) made electronic signatures legally binding documents if all parties choose to sign digitally. (Source: Docusign) Now more than 20 years old, many industries are utilizing eSignatures, thus increasing the chance that your clients are aware of the technology and would prefer it over traditional signing methods.
eSignatures enable signers to consent or express approval on electronic documents or forms. “eSign, as it is also called, is typically part of a document management system your law firm would use to create, capture, index, store, retrieve, and dispose of records and information assets. Privacy of this method has been studied extensively and baked into the technology.
Cost of eSignatures
Processing and storing documents digitally reduces the cost of paper, physical storage and the time it takes staff to manage collaboration, completion and retrieval of information.
Benefits of eSignatures
Security: Most of eSignature systems are capable of keeping various versions of documents as they are being modified or signed by different users. Obviously this provides a level of accountability and security for document content. And from a privacy perspective, the system is FAR more secure than email, one of the least secure ways to transmit information.
Improved client experience: eSignatures eliminate the need for clients to print, sign, scan, upload and email documents, which is a hassle (and, as noted, insecure). It’s even worse when signers have to take the time, effort and expense of meeting physically to sign documents. eSignatures can be captured in minutes on phones or desktop computers versus hours or days. This is particularly valuable when your client or attorney is across the country or even across the world!
Centralized location and ease of retrieval: Misplaced documents are a major headache, security risk and unnecessary labor cost. With a central location for documents to be stored and accessed by both the client and the firm, you can eliminate the need to dig through filing cabinets, stacks of paper or trash cans. Being able to put your fingers immediately on the document you need is a value-add for both the firm and the client.
Workflow tracking and auto reminders: Easily determine the status of a document, who has opened it, who still needs to sign or approve it, or who has questions that need answers.
Streamline payments: You can often pair your electronic payment and eSignature form in one convenient transaction, and clients can sign and pay at the same time.