Analysis, features and success stories with legal financial management
Do you ever have nightmares where you’re drowning in spreadsheets, it’s taking forever to update the numbers for budgets and forecasts ahead of an important leadership meeting, unexpected costs come out of leftfield or you just can’t see your financial position, now or looking ahead?
Even for the most experienced and organized CFO and their team, it can be a constant challenge to keep on top of all a law firm’s financial and accounting data when it changes constantly and comes from a variety of disparate sources, let alone manage all the necessary analysis and reporting activities in a seamless way.
Yet maintaining visibility at all times and ensuring processes are efficient and well-managed is non-negotiable: this is key to enhancing productivity in the finance function and ensuring profitability in the business.
That’s why so many firms are now seeing the rationale behind deploying sophisticated legal financial management software. Rather than relying on a system of discrete tools such as reams of spreadsheets and manual techniques to manage things like proforma review or updating the general ledger, it’s clear that having one smart, integrated solution for all your firmwide financial management needs — and one that automates processes where possible — makes a huge amount of sense.
What is legal financial management software?
Legal financial management software should deliver an all-in-one solution for your firm’s needs in order to optimize business performance and make the finance function more streamlined. It should have advanced functionality in every area — from time tracking and billing and payment metrics to cashflow management and growth projections — yet be easy to use.
Avoid unplanned costs
No one likes nasty surprises, such as missed time and expenses, fee arrangements that haven’t allowed enough of a profit margin, or incorrect invoices that have to be written off. All of the above can cost the firm heavily in real dollar terms.
A well-designed financial management solution smooths out processes like time entry, expense accounting, invoicing, and cost planning. It eliminates the need to consolidate different spreadsheets and other sources of data, as it will provide a single source of truth. Plus, it gives decision-makers easily digestible data and the latest financial insights whenever they need them.
Facilitate forecasting and budgeting for analysis and reporting
You need to be able to confidently review firm productivity, efficiency and profitability, and plan ahead. That means being able to track your firm’s budget in real time; glean intelligence on profitability drivers using analytics by practice, fee earner, client and matter; forecast budgets by leveraging direct and indirect cost data; and report on all of the above, based on reliable, up-to-the-minute financial information.
Therefore, it’s important to be able to easily access and audit workflow history so you know who’s entered what data, where and when, and be able to create reports quickly and easily for senior leaders, which can be personalized as needed.
Paul Roberts, Chief Operating Officer at Howard Kennedy, speaks to the benefits many firms are seeing when using sophisticated legal financial management software like 3E. Not only can fee earners and heads of teams get a clearer overview of activity, but they also can drill down into areas of interest, such as how much is being billed and when, and teams’ and individuals’ levels of productivity, thus helping to manage capacity. “That increased efficiency and productivity is a big win for us,” says Roberts.
“That increased efficiency and productivity is a big win for us”
Maximize partner retention and recruitment
For law firm leaders, the advantages of financial management solutions to the firm translate across to them personally. By providing transparency via a single solution that works for everyone, it’s easier for leadership teams to manage partner compensation, and track their current account, tax reserves, and capital.
In this way, they can ensure that remuneration decisions are well-founded, fair and sustainable, and keep partners satisfied.
Modernize proforma billing rules, alerts, and auditing of changes
Editing and reviewing pre-bills can be a time-consuming process which diverts lawyers away from billable work, lengthening the work-to-cash cycle and creating an unpredictable cash flow if not managed properly.
By modernizing the process with an end-to-end proforma and billing solution, the risk of human error is reduced and invoices can be sent out to clients faster. It’s vital to be able to monitor proforma status, audit what changes have been made, and expedite the entire process with accurate filtering, reporting, and scenario calculations, plus automatic alerts to prompt action from stakeholders.
Create reports with interactive data visualizations
Having access to data is one thing. Having it presented in a meaningful way so that everyone concerned can easily understand what it shows is another. That’s why interactive data visualization dashboards are so popular among law firms whose software provides them.
This makes it simple to tap into multiple data sources to create broad overviews or detailed drilldowns into specific areas of financial performance, in order to unlock KPIs, share actionable insights and make timely, data-driven decisions. There’s no reason why adjusting reports, adding firm-specific calculations or configuring new reports needs to be labor-intensive or take a long time to do.
Things may be changing fast and your time may be under pressure, but with smart solutions, you can still meet strict reporting requirements effortlessly — and have them all captured in a way that’s easy on the eye (and brain).
Jeremy Gubbay, Chief Operating Officer at Fox Williams sums it up like this: “I see huge benefits in our partners having a deeper dive into finances—all the different drivers of work profitability, both firmwide and on individual matters. With a better understanding of where we make or lose money, that can only make us more efficient.”
“I see huge benefits in our partners having a deeper dive into finances—all the different drivers of work profitability, both firmwide and on individual matters. With a better understanding of where we make or lose money, that can only make us more efficient.”
Ultimately, deploying productive legal financial management software is about increasing accuracy, boosting efficiency, creating transparency, and improving oversight — making it easier for CFOs and their teams to do their jobs well, reducing risk, spotting opportunities and adding value to the business.
|3E by Thomson Reuters
Market leading law firm management, productivity, and financial solution
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