As a law firm your primary goal is focusing on your clients and cases. As a business, you still need to be sure your financial statements are in order, bills are being paid, invoices are being collected, and your firm is in compliance with accounting principles and regulations. And, you want your firm moving in the right direction financially according to your specific goals for profitability and growth.
Do you have the ability and manpower to do all this in-house?
If you want more time to focus on billable work and client relations, outsourcing your law firm’s accounting is something to consider.
Here are 4 ways outsourcing your accounting can save your law firm time, money, and headaches:
1. Save time: Outsourcing accounting functions can free up time for attorneys to focus on billable work and client relations. Accounting firms have the expertise and technology to perform daily bookkeeping, monthly financial reporting, and preparation for yearly audits efficiently and accurately.
Best case scenario – your outsourced accounting firm would have knowledge and experience with industry-related software (like LawPay, Clio, and MyCase, for example) so that they can hop in and get started with ease.
2. Save money: Outsourced accounting services provide timely and accurate financial reporting, allowing law firms to manage their cash flow more effectively and avoid costly mistakes such as late payments or errors on financial statements. Effective cash flow management involves monitoring and forecasting the cash inflows and outflows to ensure that the firm has enough cash to meet its financial obligations, such as paying bills, meeting payroll, and investing in growth opportunities (like investing in your staff or expansion through M&A), but you also can protect yourself if business slows down.
3. Avoid headaches: Specifically for law firms, Trust accounting is a critical component and requirements, such as keeping separate trust accounts, ensuring that funds are properly identified and tracked, and conducting regular audits can be a lot to keep track of. Outsourcing your accounting can help ensure compliance with those accounting regulations and reduce the risk of financial errors or fraud.
In addition, by taking the stress off accounting tasks in particular, the law firm’s leaders can spend your time and energies working on your business.
4. Access to an entire team of accountants: When you outsource, you get an accounting firm who has staff experienced in the unique aspects of accounting for law firms. Imagine having access to the knowledge of an entire team of accountants with years of experience who have dedicated their entire careers to the pursuit of financial knowledge.
You can get a team that can offer financial oversight and collaboration to assist with budgeting and forecasting cash flow, help to define the firm’s KPIs and track results, and provide periodic reviews of key results and progress towards strategic goals without the costs associated with hiring, training, and managing an in-house accounting team (including salaries, benefits, and overhead costs such as office space and equipment, like printers and computers).
Plus, you also have the bonus of flexibility: the ability to scale up or down as needed, depending on the level of accounting support required.
The Bottom Line:
You can outsource as little or as much as you want – it’s all up to you and what fits your needs. Whether you have an accounting department that needs help with improving efficiency, or you need more day-to-day accounting support, it’s important to know (financially) where the law firm is at today, and plan for where you want to go.
At LSL CPAs, we love our law firm clients and enjoy helping them stay on top of cash flow, compliance issues, and the forward trajectory they desire. If you are short-staffed, over-worked, or just need to focus more on your operations, consider outsourcing.