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RECORDKEEPING

Use weekly financial reporting to keep partners aware of cash flow

A Vermont manager has found that running the financial reports weekly instead of monthly is an easy way for the partners to stay always aware and in control of what’s going on.

They see every penny that has come in and gone out. They know how each attorney and each practice area is faring. And they know when to expect extra expenses and what the taxes are likely to be.

The manager found that increasing the frequency was not difficult because she was reviewing the numbers weekly anyway, and printing out the figures did not really require any additional time.

But for the partners, the extra reports mean the workings of the firm stay fresh in their minds and they can make quick financial decisions when necessary.

12 pages and seven sections

She prints out the report every morning and emails it to the partners. It runs from 10 to 12 pages and includes seven sections. First is the cash flow. Here she shows the balances on all the accounts plus the totals for payables and receivables, the latter including the work in progress.

To that she adds notes about upcoming expenses for the month, especially the out of ordinary such as annual payments or computer replacements, and makes recommendations for money transfers to cover them. With that information, she says, no one is ever surprised when a one-time expense appears.

Second is the profit and loss report. It is the basis revenues, expenses and net income for the previous week and the year to date. Seeing that every week, she says, the partners keep a good mental picture of the firm as a whole as well as of the year-end tax potential.

Time summary

Third is a time summary. That is the billable and nonbillable time entered during the week and it allows the partners to keep watch over each biller’s productivity.

Next are the collections, which the manager shows for each attorney year to date. She includes the hours entered, the fees and disbursements billed and collected and the attorney’s accounts receivable balance.

Fifth, she gives the billings by department and by individual attorney. The firm has 11 areas of practice. The breakdown lets the partners see if one area needs attention, such as more cross marketing.

The sixth section is the work in progress. That shows each attorney’s current matters with the hours, fees and disbursements accumulated so far. It is a continuing overview of what everybody is doing as well as how the work is being distributed.

The last section is the disbursement journal, which shows the items paid from the general operating account during the previous week. Along with that, she lists the receivables so the partners know how the cash future looks.

Plus an expanded monthly report

The end of the month package is a summary plus additional information. There the manager shows what each client has paid. She also lists the matters opened during the month and identifies them by type and by attorney. Included too are expenses paid on contingency matters, receivables by attorney, and a balance sheet for each matter.

Three clicks, many benefits

The reports are easy to generate. It was simply a matter of setting up the categories on the system. From there it is three clicks and half the reports are generated at once. The rest of the report is her notations and sometimes a few manual calculations.

The reports take no more than 15 minutes to produce, review, and email to the partners.

The benefits, however, are long lasting.

The firm stays in control of its cash flow and operating expenses.

The partners know everything—how the money is being spent, how much is to come in, and how much time and revenue each attorney is contributing as well as how effective the billing and collections practices area.

And they can respond to business opportunities. When the weekly charts showed a continued upswing in hours for one practice area, for example, they saw immediately the need to hire a new attorney and expand that type of work.


Related reading:

How to pay the partners


To see better profits, look harder at where money starts and ends


San Diego firm gets more cash faster with easy-to-use online credit card payment system



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