The market for legal services is highly competitive, and it can be hard for firms to take on competitors who are a lot larger than they are. To keep your firm’s financial growth moving in the right direction, be judicious about how you use resources. Here are a few practical strategies for managing your company’s finances.
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Be Meticulous About Accounting
Law firms’ revenue can vary dramatically from one month to the next, so it is imperative that you’re always able to maintain a real-time view of where you stand with managing expenses in relation to your cash flow. Use a good accounting program that is intuitive and helps you stay organized. Avoid extremely intricate programs designed primarily for accountants because they may have more bells and whistles than you really need and also be much harder to use.
In preparing financial statements and tax filings, it is generally best to bring in reinforcements. Work with a CPA that has experience serving law firms and is knowledgeable about the best financial management practices in the industry.
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Seek Out Competitive Funding
Look online for law firm financing options that meet your short-term needs but also feature manageable repayment terms. The right due diligence could prevent you from missing out on great opportunities, and it could also spare you from entering into a financing agreement that puts you in the position of having to spend a lot more money on interest than you have to.
The online marketplace is a great place to look for funding options geared toward your field. When you’re applying for financing, it’s almost always better to go through a provider that has a working understanding of expense management and revenue trends that are unique to your field. Looking online, you may find better rates than you would if you limited your search to local financial institutions.
Watch for Changes in Your Credit Score and Report
Your firm’s credit score can have a determinative influence on your ability to take advantage of the financing and lending opportunities that you rely on. In addition to paying bills on time and keeping your credit utilization in optimal ranges, be sure to check your credit score and report regularly. Don’t just assume that your credit is okay because you’ve been good about paying creditors on time and you don’t have delinquent accounts.
You’d rather learn about mistakes and reporting errors well before a prospective funder runs a credit check. No matter what the real reason is for a negative remark on your score or a nonexistent tradeline that has suddenly appeared out of nowhere, a lending or financing provider is probably going to have to interpret a business credit score at its face value.
Trim Expenses Smartly
Law firms’ typical overhead expenses can be considerable, so finding creative ways to control costs could put some welcome breathing room into your operating budget. Before you renew any type of contract with a service provider, always see if there are better rates available with a different provider. Don’t automatically renew contracts without finding out if you can get a better rate. Also, make sure that everything that you’re paying for in your ongoing service contracts is things that you actually need. For example, if you’re still paying for multiple phone lines, you’re part of a growing minority. Switching to VoIP solutions is a more cost-effective, modern solution. It is especially helpful for firms that have a hybrid work environment.
Likewise, evaluate your subscriptions to research databases discerningly. Paying for more access than you practically need could run up thousands of dollars of unnecessary expenses. Do a similar examination for legal directories for which you’ve purchased premium subscriptions. You want your firm’s information everywhere that your competitors’ are. Nevertheless, if a premium subscription to a directory isn’t really doing anything for you, it probably makes sense to downgrade a plan and put your marketing budget to better use.
Ultimately, staying on top of your finances can be integral to your firm’s success and development. Good organization will help you generate good results.