Law firms, like any other business, rely on accurate and timely financial information to make informed decisions and to manage their operations effectively. Management Accounts provide this information by regularly summarising a company’s financial performance and position. Budgets, cashflow projections and expert advice are crucial to knowing where your law firm is and predicting where you are going.
With the current economic times, it is more important than ever to have access to this data. So why should your firm be using Management Accounts and what are the benefits to you?
Accuracy & transparency
Whilst lawyers have access to their own firm’s finances, this raw data can be difficult to decipher into meaningful information that can be used to support the business. Management Accounts provides you with detailed information on budgets, cashflow projections, performance analysis, and more. Raw data is transformed into easy-to-read visual illustrations that have the power to add value across the entire business. The right and accurate data gives you more control over what is happening in your firm, and the transparency of management accounts gives firms more control, allows for better strategy planning and helps avoid penalties. This information supports organisational growth and stakeholder management. On top of this, transparency is valued by clients, strengthening client relationships and engaging new ones.
Compliance & efficiency
Management accounts helps firms to manage their cashflow more efficiently, by the creation of budgets and forecasts, supporting firms’ growth. As well as budgeting and cashflow, Management Accounts also identifies areas in which firms can improve efficiency and reduce costs.
For example, a firm may realise they are spending too much on office supplies that are not needed as much as new technology to streamline operations.
In law firms, compliance is key. Law firms are required to file financial reports and tax returns on a regular basis. Management Accounts helps to ensure that firms follow all relevant regulations and avoid penalties for non-compliance.
Management Accounts provides information to support your firm in improving overall performance. Calculations are made from time spent on clients’ tasks as well as identifying inefficiencies and time-wasting tasks. This in turn helps firms avoid bookkeeping and accounting problems by reducing the risk of overbilling and underbilling clients for work, which not only saves firms time and effort, but contributes to client satisfaction. Management accounts allow firms to be prepared for a range of scenarios which could arise, such as potential financial risks and opportunities, changes in the legal market or fluctuations in demand for certain services. Having predictions through monthly or quarterly management accounting means firms can save time in their response and have clear plans in place before such events happen.
Good management accounting is crucial to the success of a law firm, and it should be done by an expert in legal accounting. Outsourcing Management Accounts to Cashroom allows your firm to focus on what matters – your clients. Not only freeing up time but also allowing your firm’s partners and managers to make strategic and operational decisions based on accurate and reliable data.
At Cashroom we recognise how important this service is and provide our clients with a developed standard reporting package that meets the requirements of the banks’ annual review.
Have a look at our whitepaper to find out more about Cashroom’s management accounts services or talk with our team to find out how we can help your firm.
P: 01695 550950
This article was submitted to be published by Cashroom as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.