Understanding Legal Invoice Automation Software

Managing invoices is labor-intensive and costly. Legal invoice automation software streamlines workflows, eliminates manual data entry, and reduces error rates. This guide looks at the impact of invoice automation software for law firms and legal departments and the key features you need to optimize your operations. AdvoLogix, a leading provider of legal practice software, offers the AdvoLogix Caster, which uses advanced AI and cloud-based machine learning to automate legal invoice intake.

Law firms and legal departments process a high volume of invoices and use two of your most valuable resources: labor and time. The American Productivity & Quality Center estimates that invoice processing costs between $1.42 and $6 for each invoice. For some organizations, the cost can be significantly higher.  That expense doesn’t account for following up with billing, chasing down invoices from outside counsel and vendors, or dealing with missed or overdue payments.

When you consider the number of invoices that pass through a legal department or law firm, it adds up quickly.

Invoice automation software dramatically streamlines the process to save you time and money.

What is Invoice Automation Software?

Invoice automation uses software to manage the invoicing process for receiving, sending, managing, paying vendor bills, and invoicing clients. As part of legal billing software, invoice automation software significantly reduces processing time, errors, and operational costs.

How Does Invoice Automation Work?

Legal invoice automation software uses a variety of advanced technology, including automated data import from your spend management system. Modern automation systems can also capture documents and extract data without manual entry.

As data is captured, it is organized and normalized into the relevant fields. This process is especially important as not all incoming invoices use the same format. Each may have unique formatting and labeling. The best invoice automation software can sort it all out and verify everything is standardized for easier processing and reporting.

Automated routing and approval workflows accelerate processing using predefined rules. Electronic processing also eliminates lost invoices or paper copies sitting on someone’s desk.

The best invoice automation software will also enable electronic billing and Legal Electronic Data Exchange Standard, or LEDES, support for law firms and legal departments. LEDES is the universally accepted set of file format specifications for transmitting billing and other electronic data among corporations, government departments, and law firms. 

Benefits of Automated Invoice Processing for Legal Departments

Leveraging the power of automated invoice processing, organizations see significant benefits.

Time Savings

Using automation to manage data extraction eliminates most manual data entry and paperwork. This frees up team members to focus on higher-value tasks and accelerates payments on both incoming and outgoing invoices.

The faster bills go out to clients, the sooner you get paid. Automation helps speed up the process to manage your cash flow better. Automation also helps reduce the time it takes to pay your vendors or outside counsel. Since invoices take nearly 10 days to process before being ready to pay, streamlining your accounts payable systems can help build better relationships with outside counsel and other vendors. 

The Institute of Finance & Management estimates that invoice automation can improve processing cycle time by nearly 80 percent versus manual processing. That statistic is not surprising when you think about what’s involved in a manual or partially automated system, which requires multiple steps:

The Institute of Finance & Management estimates that invoice automation can improve processing cycle time by nearly 80 percent versus manual processing. That statistic is not surprising when you think about what’s involved in a manual or partially automated system, which requires multiple steps:

Cost Savings

These time savings translate into significantly lower labor costs. You also save by:

  • Reducing IT overhead, print, storage, and mailing costs
  • Eliminating late fees or interest charges
  • Eliminating paper checks
  • Leveraging discounts from early payments

You can also configure compliance rules to flag anything that does not comply with your billing guidelines or restrictions. 

There are also significant savings achieved by eliminating errors. 

Reduced Errors

Research by the Insitute of Finance and Management shows that about 99 percent of invoices are handled correctly, but that one percent error rate can lead to substantial losses. The American Lawyer’s 2023 Am Law 100 Report shows the largest 100 law firms in the United States earned $131 billion in total revenue in 2022. With expenses being about half of most law firms’ billing, a one percent error rate for these firms could cost them more than $665 million.

Besides eliminating data entry errors, you can automatically detect duplicate invoices or those without the required information, such as those not properly attached to your legal matter management system, causing challenges during reconciliation.

Improved Compliance and Transparency

Invoice workflows improve compliance by enforcing legal billing rules and formats, such as LEDES billing standards for electronic invoicing. Automated approval processes create audit trails that ensure proper oversight and help with compliance.

Choosing Legal Invoice Automation Software

The right invoice automation software can make your life easier, but you need to choose a system that meets the demanding needs of law firms and legal departments. Look for legal software that integrates with your existing tech stack, including spend management and matter management systems and Salesforce or customer relationship management, or CRM, systems.

Other key functions you should look for include:

  • LEDES billing capability
  • Flexible workflow customization and rules configuration
  • Intuitive, easy-to-use interface
  • Processing of high volumes and various invoice formats
  • Scales as your practice evolves over time
  • The highest levels of security, including meeting GovCloud & FedRAMP certification for public sector clients and encryption of data at rest and in transit
  • Automated approval routing, audit trails, and compliance validation
  • Reporting and analytics for spend visibility and budget tracking

Today, most law firms are choosing cloud-based invoice automation software solutions for greater mobility. As more firms embrace remote work or hybrid work schedules, ensuring everyone has secure access to data is crucial.

AdvoLogix Offers Solutions for Invoice Automation

The AdvoLogix Caster billing and matter management platform provides robust invoice automation capabilities. Caster can capture, interpret, code, and route invoices automatically. It supports LEDES e-billing for fast drafting and validation using advanced artificial intelligence and cloud-based machine learning to optimize processes.

Caster is available as a stand-alone API hosted on Amazon Web Services or as an add-on to the AdvoLogic Spend Management application. Integrated with Spend Management, The Caster application is available on the Salesforce app exchange.

Workflows can be customized to match each firm’s business rules, handling the processing of all invoices, extracting the relevant data, and normalization for standardization. This eliminates manual data entry and simplifies complex billing and invoices.

The system also creates a comprehensive audit trail and library of all invoices so you can track expenses and budgets over time. Electronic billing allows you to share invoice data with outside parties securely.

See How AdvoLogix Can Help Automate Invoices

Whether you are a law firm, in-house counsel, or corporate legal department, a fully automated invoice process can save time and money. With advanced artificial intelligence and machine learning technology, you can accelerate processing, eliminate manual data entry, and significantly reduce costly errors. As part of your practice management tech stack, legal invoice automation software can significantly contribute to your bottom line.

AdvoLogix is a leading legal software provider that offers solutions to automate legal invoices and end-to-end solutions for practice management. Reach out today to talk with one of our specialists to see firsthand how we can enhance your capabilities. 

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