How much does it cost?
Pay by the Month costs $1.85 (GST exclusive) for every payment plan receipted in LEAP.
As the Pay by the Month service is a form of invoice financing, the monthly amount quoted on your invoice in LEAP includes additional fees and interest charges.
The rate of interest charged is determined by the size of your invoice. For example, a $5,000.00 invoice requires a monthly repayment of $455.82 which constitutes a 9.4% interest rate.
However, on the other hand a $35,000 invoice requires a monthly repayment of $3,141.66 which constitutes a 7.71% interest rate.
Overall the interest rate is lower for larger invoices but higher for smaller invoices.
Can Pay by the Month be offered against multiple invoices in a single matter?
Yes, Pay by the Month can be used to pay multiple outstanding invoices on a single matter. All you need to do is print out a Statement of Account from the Office Accounting Tab by selecting the print icon in the top right-hand corner of the matter.
This will generate a statement of account which will have a RapidPay footer displaying our standard payment terms together with the amount the client needs to pay via Pay by the Month.
Can Pay by the Month be offered against invoices across multiple matters?
Yes, Pay by the Month can be used to pay multiple invoices across multiple matters by creating a client statement of account. This can be done by opening your client's contact card (from the details and correspondence tab) and selecting the print icon in the top right-hand corner of the card.
This will generate a statement of account which shows all outstanding invoices this client has across multiple matters. The RapidPay footer will appear on this statement and will quote the monthly repayment required together with our standard payment terms.
How am I notified if a client signs up to a Pay by the Month Plan?
If your client chooses to pay your invoice via Pay by the Month, you will be notified via email that a new application has been submitted for approval.
Once the plan has been approved by Premium Funding and the first repayment is made, you will be notified via email that the funds have been transferred to your nominated office account.
Once my client signs up to Pay by the Month, how long does it take for me to receive my funds?
How quickly you receive the funds from Premium Funding depends on whether your invoice is overdue or is yet to fall due.
For overdue invoices, funds will be transferred to your nominated office account within 4 business days of your client signing up to Pay by the Month and making the first repayment.
With invoices yet to fall due, funds will take longer as the first repayment cannot be deducted from your client until the first business day after your invoice falls due. Once this happens, the funds will be deducted from your client and the full invoiced amount transferred to your office account within 4 business days.
Are there any payment limits for Pay by the Month?
For firms who are new to using the Pay by the Month service, there is a $35,000 limit imposed on individual invoices with a firm wide cap of $75,000.00.
This means the Pay by the Month option will not appear on your invoice if the amount owed is greater than $35,000 or the invoice will bring the firm’s loan limit to an amount higher than $75,000.00.
Once your clients provide a history of repayments, these limits can be increased upon application.
Can I adjust the term of the Pay by the Month agreement?
No, Pay by the Month repayments are fixed to 12 equal monthly instalments.
What happens if a client signs up to use Pay by the Month and 6 months into the repayments they want to pay the invoice out in full?
If a client wishes to pay out a pay by the month agreement, they can do so upon application to firstname.lastname@example.org. Once we receive the payout request, your client will be informed of the remaining amount owing. Once payment is received, the pay by the month agreement will end.
What happens if my client defaults on their payments?
You are protected from a client defaulting on a loan because all loan applicants must pass rigorous credit checks prior to being approved for a Pay by the Month loan.
The first instalment must be successfully paid by your client for a Pay by the Month loan to commence. If your client should default on the loan after the first repayment, the remaining loan repayments will be transferred to you. Essentially the first instalment covers loan fees and charges.
This process ensures you will not be out of pocket should a client stop paying and your obligation will be to repay the advance you received.
For example, a $5,000.00 invoice requires a monthly repayment of $455.82 which constitutes an interest rate of 9.4%.
For this plan to become active, the payer must make the first repayment of $455.82 meaning the total remaining amount over the next 11 months is $5,014.02.
If the payer failed to make any further repayments, the law firm would have to pay back the amount advanced to them over the next 11 months. If the firm chose to do this, they would have to cover a $14.02 interest shortfall.
However, with a $35,000 invoice the monthly repayments are $3,141, which constitutes an interest rate of 7.71%.
For this plan to become active, the payer must make the first repayment of $3,141.66 meaning the total remaining amount over the next 11 months is $34,558.26.
In this example, even if the payer failed to make any further repayments, the payer would have paid an additional $441.74 off the principal as the first repayment covers the applicable interest and part of the principal owed.
Law firms wouldn’t be liable to pay back any interest owed on this example plan as the payers first repayment covered the interest and part of the principal.
Please note, the examples shown above are for illustrative purposes only. Interest rates and charges are subject to change and could be different in the future.