Even large law firms can experience massive fluctuations in cash flow. If you do not plan for these fluctuations they can hit your firm hard. Your firm may settle and be paid for a large case this month, but not experience that large influx of cash for another several months. Here are some ways you can improve the overall cash flow for your firm.
- Customer payments – make paying convenient for your customers. By providing multiple ways for your customers to pay including online payments, email links, or even offering payment plans, you can decrease the time it takes to receive payment from your customers.
- Reduce costs – evaluate your business spending. Look for areas to lower internal costs such as by outsourcing your bookkeeping to a firm like EVA Business Solutions. Determine which marketing efforts are providing the greatest ROI and cut the rest from your budget. Negotiate prices and terms with vendors. Search for software/subscriptions on auto draft that are no longer being used and unsubscribe.
- Track billable hours – ensure you have a system for tracking billable hours in real-time. Case management and timekeeping software can help your firm track billable hours and ensure hours are not lost. Keeping billable hours high compared to admin hours will help keep your profit margin high.
- Improve efficiency – management reporting can be a great tool to improve overall cash flow in your law firm. By utilizing a bookkeeping firm such as EVA Business Solutions, you can have the management reports you need to effectively analyze areas for improvement, implement changes and monitor progress. Having more accurate data available can help you put processes in place to reach your goals.
Try not to become a person of success, but rather try to become a person of value. – Albert Einstein