Is your law firm making enough profit? Probably not, but that’s not because you are not working hard; it’s very likely because you are not working on profit management; you are working for your clients. Turning a profit requires strict attention to the money making side of things, and that is one place where you may need to consider outsourcing instead of downsizing to turn a profit. Better accounting for law firms can help you.
Have a financial plan
Unless you have made a plan to make your business profitable, you will have a hard time of doing so. You need a financial plan to determine how your firm’s performance can measure against the income and expenses. Accounting for law firms will be able to help you create projections based on your performance to date. This kind of plan makes everyone in the firm responsible for billing and collections, and can review actual monthly occurrences so that more of the firms focus is on the financial side.
Be clear about fees
Let people know about costs upfront to avoid disputes later. This is another place where it can be very useful to hire from outside to help you manage your billings and set your fees. Accounting for law firms can help you avoid fee disputes, write-offs and unpaid bills by setting up clear plans and policies in advance. This is something that the legal team is too busy to be concerned with, so why not outsource? It will definitely improve profits.
Set up billing and collection methods
Many law firms are suffering from a poor inflow of earnings because they are often slow to bill. Deferring billing until after all the work is completed can be too much time between work done and work billed, making people reluctant to pay. Billing and collecting means that you have enough operating capital to keep working for the client. If this is a problem, then hiring accounting for law firms will help you set up a regular schedule. Sending out bills more often, and in less jaw-dropping amounts, can help the bills be paid more regularly.
Charge a reasonable fee
You need to be sure that your charges reflect the amount of money that your firm needs to become profitable, but that they also reflect what the market can pay. Accounting for law firm services can help you become aware of what others are charging for similar services and help you set up a set of standard contract for things done regularly, and more open contracts for other services.
Hire outside help
If you are having trouble managing the money coming into the firm because of lack of time to work on accounting aspects, then hire someone to do this work for you. Hiring a professional accountant can help you turn the profits in your firm around and put you in a better financial position. Set up billing procedures and have everyone in the firm follow them. An expert specializing in accounting for law firms can help you. You will find this more effective than having the partners in the firm trying to manage it individually.