Law firms are continually searching for opportunities to either (A) increase revenue or (B) reduce operating costs. This is an ongoing priority for managing partners and administrators in law firms of all sizes. Occasionally, not often, we are able to identify a single proposal which accomplishes both simultaneously. This is one of those rarified occasions.

PSRG should adopt procedures to convert from mailing client invoices to delivering client invoices via email. We propose moving quickly over the next three (3) months to achieve 100% electronic delivery of invoices – no exceptions. Successful implementation of this proposal will:

1. Improve cash flow by placing invoices into client’s hands faster; and

2. Reduce operating costs – e.g., postage expense; paper costs; personnel costs associated with manual processing of paper invoices.

I am aware there is a natural resistance to change among the firm’s lawyers. Some will be skeptical about whether expense savings will actually be achieved. Also, it is likely the lawyers will express concern about how this will be implemented from client perspective. We have anticipated many of these concerns as set forth herein.

Finally, it is important we all recognize continued reliance on the US Postal Service is not a viable long-term option. Proposed cutbacks at the Postal Service – originally scheduled to take effect last May; currently on-hold pending a financial subsidy from Congressional [insert own joke here!] – will add (on average) 2 additional days delivery of first class mail. Based on our $6 million revenue budget, the Post Office cutbacks will cost PSRG $96,000 in 2012 revenue this year – if the proposed cutbacks come to pass. We really have no choice and need to get ahead of possible USPS cutbacks.

Email delivery of invoices ensures same day delivery – a 1 day reduction in the current collection cycle; cutting 3 days from the collection cycle once the USPS cutbacks are implemented. Email invoices to clients also will reduce our operating costs. The time has come for PSRG to stop licking stamps, suffering paper cuts, and reduce its carbon footprint by hitting the “send” button to deliver invoices to clients!

Snail Mail to Get Slower

Unless Congress intervenes, the USPS plans to close 242 of 487 regional mail processing centers to stem its annual multi-billion dollar operating deficits. Shuttering these facilities will add 2½-to-3 additional days to the average “next day basis” for first class mail.

This means the time necessary to deliver paper invoices by mail to clients will increase from 1 day to an average of 3 days. Similarly, 2 additional days will be added to the time it takes for the client’s envelope containing a check payment to arrive at the firm. In essence, should the USPS cutbacks take effect, the firm’s accounts receivable collection cycle will increase by 4 additional days.

If the firm’s collection cycle increases by 4 days, PSRG is likely to miss the budgeted revenue target by $96,000. This is computed as follows:

By simply adding 4 days to the collection cycle, $96,000 – which otherwise would have been collected by December 31st – will be collected instead in January 2013. This means $96,000 less 2012 revenue and a corresponding drop in net income to partners.

Operating Cost Savings: Email vs. Snail Mail

Sending paper invoices through the mail costs a lot. Postage is expensive. Add to that the processing invoiced before the postage is affixed: personnel costs, printers, toner, paper, envelopes, and a lot of handling, sorting, folding and stuffing. It is also necessary to take into account the time required for the USPS to affect delivery.

In contrast, generation of invoices for email delivery requires significantly less labor and material costs – i.e., most of the processing is accomplished automatically within the computer system – while also promising virtually instantaneous delivery to clients. The following is a side-by-side comparison of the procedures involved with paper invoices-vs.-email invoices:

Behind the Curtin – How Email Invoicing Works

Emailing invoices does NOT involve printing paper invoices, then scanning the paper to create a PDF, and finally manually entering email addresses, as some partners I have spoken with assumed. Processing invoices for email delivery is much more straightforward with nearly all of the work performed within the computer system.

Up-to-date software, like that from Orion, streamlines the email invoicing process. The key features are as follows:

1. Billing module stores both a physical mailing address and email delivery addresses for every client and matter.

2. Each matter must be designated either for “printed invoice” option or for “email invoicing.”

3. Matters designated for email invoicing may contain multiple email addresses using the common “To:”, “CC:” and “BCC:” designations.

4. During the billing process, the computer system automatically generates a PDF of the invoice which is sent, together with the corresponding email delivery addresses, to a pre-designated Outlook account.

5. The billing manager or administrator then accesses the Outlook account to “send” the emails. Same individual will be responsible for monitoring said Outlook account for any non-deliverable email notices or replies which may be received.

The entire process of preparing and sending invoices by email involves significantly fewer steps than what is required to print and send paper invoices.

Proposed Action Plan

A. The August billing (of July time) will proceed as in the past.

B. We will schedule a meeting of all billing lawyers for mid-August to discuss Action Plan:

a. Stress negative impact of pending USPS cutbacks.

b. Illustrate potential cost-savings – less postage, paper, toner, overtime.

c. Demonstrate potential revenue gain by shaving even 1 day from collection cycle through instantaneous email delivery of invoices.

C. Effective September 1 – for all new clients, intake procedures and engagement letter will be modified to obtain email addresses for invoice delivery.

D. Reach out to existing clients using form letter and reply form – see Attachments A and B.

E. Be prepared for the following:

[i] A few years ago, at my first law firm, the mailroom staff was processing a large stack of one-ounce envelopes containing client invoices. At some point, their work was interrupted to create a $4.50 postage stocker for an unrelated package of documents. Returning to the original project, the staff neglected to notice they forgot to reset the postage meter to 33 cents. Days later, no fewer than ten clients mailed back the overpriced envelopes back to the firm with “nice” messages suggesting mailroom supervision would permit us to reduce our excessively high hourly rates. This is not one of my fondest memories as a law firm administrator.