Mastering e-billing compliance: how law firms can improve collections and reduce DSO for e-billed clients with Modular Services
Case Study by Modular Services
The increasing adoption of e-billing both in the Legal sector and more widely in professional services settings has accelerated driven by the AI revolution that has enabled faster and more accurate billing compliance analysis. It’s no wonder that companies across all industries are adopting e-billing technologies as the platform vendors promise to reduce inbound invoice processing costs by a whopping 80% compared to traditional manual methods.
Increasingly Legal and professional services providers must ensure their invoices are submitted electronically and comply with complex billing rules before their client will even begin to process their invoices. Those billing rules (in the Legal sector – frequently referred to as “Outside Counsel Guides”) not only specify the format of the electronic data being submitted (typically using UTBMS coding) but also may specify complex rules about the accompanying line-item narratives, charging rates, submission frequency and submission / service periods.
Governments are not far behind in this endeavour, many countries making e-invoicing systems mandatory to accelerate adoption and strengthen regulatory pressures on business across the board. But by far the biggest accelerator has been the integration of AI and Machine Learning into billing systems which enhance the efficiency and accuracy of the billing process. The technologies have succeeded in automating complex billing tasks, creating predictions for customer usage patterns and providing valuable insights which can ultimately lead to optimizing billing operations.
Law firm’s clients have inevitably been part of the movement, embarking on the transition to e-billing platforms alongside their legal service providers. To cater specifically to clients who want to manage their legal spend more judiciously companies like Thomson Reuters, Wolters Kluwer, ELM Solutions and others have built legal e-billing platforms.
They all advertise their solutions as an automated legal spend & matter management that looks to streamline and automate accounts payable processes, performing invoice content validation, providing automated invoice approval, auditing and routing, all within a secure environment and that most importantly, as one company boasts, looks to help legal departments control outside counsel spend with data-driven dashboards, leading to cost savings of 5-15% annually.
That is a claim many CFOs would seriously consider.
Modular Services – Your Partner for Automated E-Billing Dispute Handling
Modular Services was appointed the complex task of optimising the e-billing invoice submission process for CMS UK back in 2021. At that time, the service was managed by an overseas outsourcing company that faced significant challenges in processing invoices and experienced painfully long collection times. The situation worsened whenever a new client requested to switch to e-billing, further adding to the Finance department’s cash collection challenges on top of the effort for setting up the e-billed client in the firm’s finance systems and mapping the controls and processes for issuing e-bills to the agreed contractual provisions.
The Modular Services E-billing & Automation team managed to understand, learn and thoroughly document each customer’s complex compliance and Outside Counsel Guides. “The guidelines are created with the purpose of rejecting as many bills as possible” had concluded one of the E-billing analysts. However extreme, the statement has some basis in reality, with AI built into these platforms, scrutinizing each invoice to the letter. A single misspelt word, or any minor syntax error will cause AI to automatically reject the invoice leaving the e-billing team with the task of reviewing the invoice again in search for clues as to why it was rejected as sometimes rejection reasons are not forthcoming.
The Modular Services team efforts produced a 35% reduction in the average number of days to payment across CMS within the first year, by automated reporting and re-issuing of bills based on rejection codes across 80% of the e-billing portals used by the CMS UK’s clients. For some of the firm’s large client accounts, where collections were notoriously difficult, often taking over 120 days, the Modular team has managed to reduce the average days to payment by 60%.
The Modular Services team is still constantly reworking the onboarding process for each of the e-billing portals used by CMS UK’s clients, working closely with the client representatives to understand their requirements in terms of matter descriptions, timely submissions and internal approval processes. The e-Billing service is an iterative effort that consistently applies the feedback of Partners, clients and internal Finance team representatives in terms of UTBMS requirements, narratives, codes and rates in creating and issuing e-billing invoices.
Modular Services – Your Key to E-Billing and Finance Operations Success
The experience and best practices embedded by the Modular Services teams into the Legal Finance Operations of CMS UK is a success story that can be replicated to other law firms facing the same challenges with E-billing activities and cashflow management.
Key figures
- 35% reduction in the average number of days to payment across CMS within the first year and 52% reduction in average days to pay across all e-billed customers within 2 years of Modular Services being contracted to run CMS UK’s e-billing operations.
- 25% reduction of days outstanding in the full cycle from time recording to invoice creation and finally payment.
- 7% added efficiency in e-billed customers average days to pay compared to non-e-billed customers in current year.
- 20 million in cashflow improvement in 2023 vs. 2022 rendered by invoices paid on time (by payment term due date) and additional 88.5 million of cashflow efficiencies generated by the reduction in the average number of days to pay.
Our commitment to law firms is a 10% reduction in the average number of days to payment across the top 10 client accounts 6 months after the processes are implemented and the service starts.
Sign-up today for a free Consultancy Session with one of our E-billing Experts and embark on the journey of successful cashflow management!
