It doesn’t matter how many clients you bring into your firm, if you are unable to manage your finances, you will fail.
Managing your finances goes way further than just storing your funds in a bank account. It is extremely important to handle this tedious task. Mismanaging your finances will cause you to not know where your business is heading. Maintaining your financial records will let you know exactly how your revenue and expenses are stacking up, makes tax reporting and payments a lot more manageable, and will allow you to make well-informed discussions about your business.
Your business is quantified by increasing customers, resources, and profits. As it continues to grow, so should your knowledge on how to institute good business habits in its workflow. The following article outlines 7 simple tips on managing your firm’s finances.
Pay Yourself
It is easy to take all the income you are earning and put it back into growing your practice and paying your employees. It is equally important to pay yourself first. Afterall, you are an important part of the practice and should be compensated as such. You can always adjust your salary as the company grows.
Keep Your Your Trust and Operating Accounts Separate
First of all, it’s important to know that money deposited into your trust (IOLA) account is not income and should not be treated as such. Money in your IOLA account is your client’s money that is held and should not be used to pay for operating expenses. You may withdraw funds from your IOLA account once you’ve earned the fees. Unearned money is kept in the trust account because it belongs to the client.
Invest In Growth
There are many ways to invest in the growth of your practice. Most people think of networking first, which is a great way to get referrals. Your website content is another way to attract new clients. Potential clients want information and to get to know you before they hire you. They will search for this information and your website is the first place they will look. Providing relevant content that not only shows them your expertise but allows them to get to know you personally is the most effective way to reach potential clients.
Consider Hiring A Professional Bookkeeper
Chances are, you are not a numbers person. But you may think that you can save money by handling all your bookkeeping by yourself. By hiring a professional, you free up your time to bring in and handle more cases, which in turn will generate more revenue. Your time is better spent working on the legal matters before you. Let a professional bookkeeper handle the numbers for you.
Have A Good Billing Strategy
Having a large client load will result in increased revenue. But if you do not have a strategy for billing those clients, you will not see any of that money. There are many billing platforms that you can use to ensure that you are on top of your invoicing in a timely manner. It is worth the added expense to keep your billing running smoothly.
Plan Ahead
It is important to look at the whole picture when it comes to your finances. Your business plan should include your financial goals. Remember to not only look at your operating expenses and potential cash flow, but also any debt that you may be carrying into your business such as student loans. The more detailed your plan the greater the chance you will stick to it and be ready for anything that comes your way.
Maintain A Good Rapport With Your Team
All the planning you did to start and maintain your law practice can easily be ruined if your team is not working with you. It is important to have policies in place to maintain employee satisfaction. You want employees that will be with you for the long haul. It is essential to have open communication and build a lasting relationship with your employees so they are as invested in your practice as you are.
