By Ryan Beck, ClientPay General Manager
Using the right technology can help law firms shave off 10-40% off credit card processing fees.
Profitability is king in business. Like every other business, law firms constantly look for ways to increase revenue and decrease costs while improving customer satisfaction and retention. But when it comes to reducing expenses, it’s easy to overlook the costs related to the accounts receivable process. The cost of payment processing is simply an accepted cost of doing business.
Law firms that process a substantial amount of credit card transactions often pay thousands of dollars a year in processing fees. So, how do firms tackle the challenge of reducing this significant expense?
There are two approaches: You can contact your merchant account provider to renegotiate your rates. However, service providers are often unable to lower rates beyond a certain point, and you may only shave off a small percent off your monthly statement. A far better approach is to look to automation to manage your payment processing data.
The payment processing landscape is complex and can be difficult for businesses to navigate the terrain alone. It is understandable why many B2B businesses opt to use basic systems to process payments and send transaction data, like simple online virtual terminals or standalone “swipe” devices that require the physical presence of a credit card to be run through a machine. While these systems are usually easy to deploy, they might end up costing the business an extra 10-40 percent in extra fees that could have been avoided with better data management systems.
Technology that automatically recognizes the most cost-effective way to process transactions ensures businesses get the lowest rate every time. This process, known as interchange optimization, is the key to reducing payment processing costs and improving profit margins.
Interchange represents the largest portion of monthly fees in merchant credit card processing statement. There are various fees that can be applied to each transaction based on bank, credit card type, industry and other factors. Interchange fees can’t be avoided when processing payments through a merchant account, but they can be minimized by improving the qualification rates.
This is done most cost-effectively through the use of integrated payment processing software which automatically submits necessary transaction data. This level of processing requires merchants to enter very detailed data in order to process transactions that qualify for the best rates. It is virtually impossible to do this without a well-equipped payment processing solution, like ClientPay.
Payment processing automation offers law firms many other benefits, too. Firms can see improvements in cash flow by streamlining the payment experience. Managing receivables can provide new levels of operational efficiency while enhancing your bottom line. Consider the back office process in accounts receivable: invoicing a customer, receiving payment from that customer, and settling the transaction within the A/R system platform. Efficiencies include reducing data entry time and errors, making fewer trips to the bank to deposit checks, and less time waiting for transactions to clear the bank.
In addition to the back office efficiencies A/R automation provides, setting up online invoicing with a “click to pay” option through a secure web site portal can also be a big time saver for both your firm and your clients.
Law firms that take the time to research payment processing solutions that fit their individual business requirements will be rewarded for their efforts with lower costs, better cash flow, labor efficiencies and customer satisfaction.