Getting on top of your financial management
Professionals in small legal firms must wear many hats, from solicitor to marketer to accountant and more! And all of your various responsibilities can leave you feeling distracted and spread too thin.
To make matters worse, lawyers in smaller firms can also be expected to act as financial controllers, assuming responsibility for balance sheets, bookkeeping, invoicing, compliance and more.
Fortunately, technological advances have made it possible for small firms to streamline their financial management processes. So if you’re ready to minimise time spent on finances so you can focus on what you do best, this article is for you. Here are five practical ways small legal firms can improve their financial management.
1. Clarify Your Current Financial Management Processes
Financial management processes must be visible and easy to understand for all members of your legal practice. If your current methods are muddy, or if only a portion of your team knows how they work, it’s time to clear things up.
But how do you take stock of your current processes to identify leaks and slippage?
Look at your current key performance indicators to assess your performance, such as:
- Number of billable hours
- Billed hours compared to hours worked
- Number of unbilled days
- Number of uncollected days
- Utilisation rate (the billable hours divided by the hours in a workday)
- Realisation rate (the billable hours invoiced divided by the billable hours worked)
- Collection rate (the number of hours collected divided by the number of hours invoiced).
Many legal professionals are surprised by their utilisation rate, realisation rate, and collection rate. But once you see where you need to make improvements, you can focus your efforts.
2. Simplify Your Billing
Simplifying your billing processes not only saves you time, but it can also reduce debtor days by making it easier for your clients to pay. Consider the following improvements:
Make your life simpler with a streamlined billing process through legal software like mattero. mattero allows you to create the invoice transaction and then sync it to Xero, which does all the rest of the work. In addition, you can create draft bills and keep track of trust balances when creating invoices.
Effortlessly Manage Payments
You can let Xero manage the payments, and mattero’s intelligent two-way integration will sync them back, keeping your billing up-to-date throughout your system. When everything is automatically updated, you can track everything easily, even when clients make partial payments.
3. Integrate Your Legal and Accounting Software
Instead of using two separate systems, integrate your legal and accounting software for superior efficiency and accuracy. Instead of flipping back and forth between two different systems, use them together.
Xero is the leader in small business accounting, and your law firm can use its very best time-saving tools while still minding your legal-specific organisation.
Innovative two-way synch
mattero integrates with both new and existing Xero subscriptions so that you can move forward with world-class integration no matter your status.
Payments made in Xero sync to mattero, so you can easily monitor pre-payments, overpayments and even credit notes. You can also synchronise trust invoice payments through both programs.
4. Use Time Recording Software
When you’re in the thick of a document or case, recording your time feels like a distraction, and it’s all too easy to forget to keep records. But lost records mean lost revenue for your law firm, so it’s imperative that you use a system that tracks your time.
Legal software like mattero allows you to enter time from anywhere with the global Create button. It’s easy to set up cost codes for various fees, and you can change the way you want with editable units or fixed time.
5. Keep Everything Under One Roof
Every aspect of your firm’s operation has an impact on your bottom line. For example, if your firm struggles to produce timely and accurate invoices, you probably won’t receive payments on schedule. As a result, your cash flow will suffer, causing stress in many different areas.
Legal software can help small firms to manage every aspect of their businesses and keep everything under one roof. A single platform that can power your matter management, documents and more while integrating with other best-in-breed platforms will simplify your software stack and streamline operations.
You can try mattero and see for yourself with a free trial. Your employees will be able to access everything, anywhere, at any time and from any device. Everything you need will be at your fingertips, whether you need to find a critical document or check on the status of an invoice.
Work smarter by instituting these five improvements for your small law firm. Questions? Reach out to us at 1300 135 214, or start a free trial today.