Managing the cashflow of your legal practice can be a stressful task and it is common to feel the squeeze while you are running your business. Here are our 5 tops tips to enable you to have greater control over your cash and improve your cash flow:
1 Raise Bills On Time
When you are busy running your legal practice, some administrative duties can get forgotten. The sooner you get your bills out, the sooner you get paid. So if you are guilty of billing your clients slowly, set a new process in place that ensures bills are raised as soon as work is completed.
2 Credit Control
For services such as conveyancing it is common to receive an amount of money up front which covers your fee so upon completion you can simply raise the necessary paperwork and draw the money from the client account. However many legal services are billed once the work is complete so it is really important you keep your debtors ledger up to date and implement a procedure to chase up clients when the fail to pay within the agreed payment terms. The longer they take to pay the bigger the impact on your practices cash flow.
3 Keep Overheads Low
It seems obvious but every growing business should keep their overheads as low as possible. Overheads need to be paid regardless of when you collect money from your clients, for example rent often needs to be paid at the start of each month. So by keeping your overheads low, you minimise the working capital you need to have in your bank account each month.
Solicitors know the pain of completing timesheets and chasing for other team members to fill theirs out but even this impacts cashflow. A solid tracking system will ensure you know how much billable time you need to add to your clients fee notes. Higher fees mean more cash in your account.
5 Find an Accountant
A day to day accountant, bookkeeper or financial controller can help you stay on top of your finances and offer ongoing advice to improve your business processes. With regular up to date figures you can understand who owes you money, take a closer look at billings as well as help you prepare cash flow forecasts and understand your overheads.