Some people are born to work in finance. Numbers make sense to them, and they’re never happier than when they have a balance sheet or bar graph in front of them. It’s a kindness, really, to give them critical financial roles and responsibilities in your law firm.
You can’t just assign tasks willy-nilly, however. It’s important to match skills and temperament with the job to safeguard your law firm’s financial performance. We’re going to look at how you can ensure your firm grows from a strong financial foundation.
Appoint a Financial Manager or CFO
It’s kind of like the top-down approach, isn’t it? The head honcho sets the tone. You must hire a qualified financial manager or CFO who is not only skilled at their job but also has the qualities of a good leader – empathy, compassion, active listening, and inspiration.
CFOs typically oversee all aspects of financial management, including accounting, budgeting, and reporting. They are responsible for risk assessment and management and develop and implement strategic plans for revenue optimization.
Their role is demanding and can be stressful, which is why the manager you choose should be resilient and have skin as thick as a rhino.
Establish a Finance Team
Finance managers need the support of a crack team of specialists in billing, invoicing, accounts payable and receivable, payroll, trust accounting, etc. CFOs must play a key role in recruitment because they know how they want to run the department and can identify candidates most likely to thrive in that environment.
Priority qualities vary according to the CFO’s requirements but they usually include integrity, a good work ethic, shared values, the ability to work in a team, and, naturally, the desired qualifications and experience.
CFOs might choose a candidate who doesn’t completely meet the skills requirements, but who has the other qualities in bulk. That’s why a good training program should be included in the department’s action plan.
Define Partner Responsibilities
Partners work hard to reach such heady heights. It’s only fair to ensure they understand their new responsibilities – and their limitations. For example, a partner might share in recruitment decision-making but play no role in product or service procurement.
It’s not enough, however, for them to understand their roles, they must also accept them. For example, the partner above might have assumed they’d have greater decision-making power and be cheesed off that they’re limited to procurement. Their acceptance of the role is grudging and could negatively affect performance.
That’s why it’s so important to manage expectations, especially including budget oversight and client-billing review in their responsibilities.
Delegate Administrative Tasks
A good leader understands the fine art of delegation. It’s not ordering people around. That’s a surefire way to shatter morale and sink productivity.
Nope, good leaders know how to delegate tasks according to people’s strengths and then provide ongoing training that empowers them, encourages ownership, and boosts morale and productivity.
Think carefully when you delegate tasks like data entry, bank reconciliations, and expense tracking and allocate them to the people best suited to the job.
Note: Another morale booster is rewarding good work. This means that team members don’t mind performance monitoring because the more accurately and efficiently they work the greater the perks.
Consider Outsourcing
There’s no shame in outsourcing accounting services. In fact, outsourcing is one of the smartest decisions you can make. There are three simple reasons:
- Access to highly specialized financial experts across the range of accounting services.
- Outsourcing to experts is far more cost-effective than hiring a full-time, in-house professional.
- You don’t have to worry about tiresome details, like adherence to legal and regulatory requirements.
Another major benefit is access to modern technology and techniques. Outsourcing firms must keep up with developments in the field. Ensure your accounting firm uses only the latest and best accounting software, for example, modules from Sage Intacct.
Establish Reporting Protocols
One thing about outsourcing that could be interpreted as a disadvantage is reporting. An in-house financial officer can provide information immediately. However, requesting reports from your accounting firm might not be quite as quick.
That’s why establishing reporting protocols is so important.
Reporting protocols significantly enhance accuracy, providing the information you need to make data-driven decisions. The foundation for these insights is established at the beginning, when you determine reporting structure and frequency.
Your law firm’s financial health is at stake, so go ahead and schedule regular reviews that show whether it’s all smooth sailing or you need to restructure reporting protocols to remain in calm waters.
You’re Never Alone With Sage By Your Side
Successful law firms are built on stable financial foundations. Part of that is determining your firm’s accounting needs and finding the most cost-effective way to meet those needs. Outsourcing., for example, provides access to financial experts and the latest financial technology without incurring significant expenses.
However, the structure and transparency in your financial management system don’t absolve you or your staff of accounting best practices. There are processes and protocols to follow when it comes to things like billable hours and invoicing. Sage Intacct accounting software is invaluable as it provides a framework for the average (and above average law firm to enter, track, and interpret data for insightful decision-making.
