Credit and debit card acceptance is an essential practice management tool that is often overlooked as a means to increase revenue and cash flow. Many clients, including prospective clients, prefer the convenience of paying with credit or debit cards as opposed to checks. Opening a merchant account for your firm is a simple process and immediately gives you more control of your receivables. Why turn away a prospective client who wants to use your law firmís services and has the means to pay promptly?
Separating Earned and Unearned Fees
One key feature to consider when opening your merchant account is your firmís ability to separate earned and unearned fees when accepting credit cards. In order to stay in compliance with the American Bar Association and most state guidelines for credit acceptance, a merchant account must correctly separate earned and unearned fees into operating and trust accounts, thus preventing the commingling of funds. Most importantly, a compliant merchant account enables an attorney to designate which account should be used for withdrawals of all processing fees.
Payment Authorizations on File
Once your merchant account is established, implement new procedures to take advantage of the service. One of the best ways to control receivables is to keep a payment authorization form on file for every client. Avoid the hassle of chasing down delinquent payments by providing a credit authorization form with all letters of engagement. A credit authorization form gives your law firm permission to charge a clientís credit or debit card for a certain amount. You can also arrange to automatically bill any past due balance over 30, 60, or 90 days to the clientís credit card on file. In addition, adding an option to pay by credit card on your monthly invoices will greatly reduce late payments.
Proceed with Caution
Ensure you have the proper procedures in place to handle such transactions. This includes compliance with trust account guidelines, proper documentation for chargeback prevention, and basic security procedures to protect cardholder information.
One of the most common concerns with credit card acceptance is the risk of a chargeback, which occurs when the cardholder files a dispute with his or her credit card issuing bank. To successfully defend an unfounded dispute, your law firm must prove two things: the work was performed and the client gave his or her permission to charge the credit card to pay for that work. Proving that your law firmís services were provided is often the easier part. Clearly documenting and tracking every minute of work performed is a standard part of your operating procedures.
Surprisingly, where law firms often fall short is in obtaining a client signature for a credit card transaction. If you currently accept credit card payments, review your process and ensure you would be able to provide key documentation needed if a charge is ever questioned.
In addition to documentation, you must have a procedure in place to handle and store client credit card information. All card information should be kept under lock and key, with access provided to authorized staff members only. Card information should never be stored or shared electronically, including via e-mail.
Common sense should dictate when client information may be at risk. You should give credit card data the same level of confidentiality afforded to other sensitive client information. (For more detail on card security, visit the PCI Security Standards Council website at or www.PCICentral.com.)
The Bottom Line
A merchant account can be the secret weapon to resolving payment issues. It provides payment flexibility as well as convenience. In addition, offering credit cards as a payment option can attract clients and win new business. Now you can spend less time chasing down collections and more time practicing law.
The [NH Bar Association] members are eligible to obtain a Law Firm Merchant Account through the Associationís Member Benefit program. With the Law Firm Merchant Account, members save an average of 25 percent off traditional bank processing programs. More importantly, the program is designed specifically for attorneys with the ability to correctly separate earned and unearned fees.
If you have not yet taken advantage of this great member benefit you may be missing a huge cost savings to your firm. Begin accepting credit cards and guarantee payment for your legal services.