Working within the legal accounts sector is always challenging; no one lawyer operates in the same manner, and attempting to change their procedures and protocols to a more streamlined, straightforward approach can take time and attention.
In this blog I will outline some of the key areas we focus on when taking a new client under our wing – and how you can make these changes to your own business to help yourself (and your bookkeeper!)
Time is so precious to us all, especially when you charge by the hour. We have seen it time and time again (no pun intended!): lawyers leaving their accounts until the last day of the month to be suddenly confronted by a mountain of papers and confusion. This may work for you, however 9 times out of 10 it usually does not.
Our experience has taught us that our clients are much more content with life when they set aside a small amount of time, either daily or weekly, to get on top of their accounts. It sounds simplistic but the best rules in life usually are, and it really does work for them.
The key point to consider is that, if you update your accounts regularly, all the relevant information is then at the forefront of your brain and the unknown details are limited to a very small amount, if any, resulting in peace and calm. When this process is deferred over a month or more, every transaction becomes a distant memory, a blur of numbers, which in turn takes you more time to decipher any issues that arise. Cue mild hysteria and panic! It may seem simple but a little attention, paid on a more regular basis, really works.
Compliance is key. Lawyers are governed by a very strict list of rules whether be it the SRA or CLC. It makes our life easier when new clients fear these rules – the way you used to fear your parents shouting you by your full name! These rules should not be overlooked or taken lightly, this is our best advice. Learn to adhere to them and do not be the one having to find ways around or looking to circumvent them for any reason.
Our management team’s years of experience in our current and previous organisations, has led us to cross paths with every scenario possible. What have we learnt? Your practice is too precious to be put at risk, there is a very real threat of being shut down or struck off, so plan wisely and remove the danger.
How can you stay compliant? It’s easier than you may think: simply keep everything up to date. This links back to our critical first point – spending that small amount of time on a regular basis to keep everything up to date can save you.
An example; you write a cheque from office account to pay your rent, you mistakenly write it from client account. When is this detected? That depends on how you manage your accounts, if you’re making the effort daily, then it is rectified the following day, if you’re the monthly type of person -well now you’re in trouble!
Are we making money?
This is a question we are asked on a regular basis. Month-end is the best time to check this, everything is finalised and you are able to see an overview of how everything is going.
Things to take note of are large expenses and large receipts. For example, if you have paid your rent for the next 6 months, this will distort your figures. Simple accounts journals can show the expense in the correct months giving you a more precise reading.
Understanding how to read your management reports is very important. It’s something we invest a lot of time in with our clients, teaching them how to use and interpret them. Once you understand what you are reading, you then have a good grasp on your business. This is where it gets interesting; cost-cutting and cracking the whip may be necessary, as most good businesses question the necessity and size of every expense and cost.
Finally, software is such a vital part of your business it has to be correct for your business needs. The worst thing you can do is look at the price tag when deciding on software, instead of looking at its ability to grow and fit in with your business.
Historically it was always the accounts department who were the driver behind the choice of accounts software. However as times have changed, it is now the fee earners who are making these decisions. This is where case management packages excel, streamlining processes and allowing your fee earners to concentrate on making money.
Whether you are a Sole Practitioner or a Partner/Director at a larger firm, these are all valuable lessons to take on board. We have worked with every type of law firm imaginable and on almost all software platforms available on today’s market. Understanding a few important things can make everything run more smoothly and in turn help you make money.
Numero’s top accounting tip
When you are doing your client to office transfers, make sure you transfer the VAT element into a separate account. Never consider this as your money. This way, at your VAT due date, there is no panic about having to make the due payment.