Some people don’t do well with rules, which is toughies for them because reasonable rules are there to be followed. They aren’t imposed for the fun of it. They serve a purpose. Law firms, in particular, know this. So it shouldn’t be too difficult to develop, implement, and adhere to financial policies and procedures.
In theory.
We’re going to delve into eight best practices that will not only help establish clear financial policies for your law firm but will also look into how you can encourage your staff to stick to the plan,
After all, don’t you love it when a plan comes together?
Start with a Solid Foundation
Do you know what grows without a solid foundation? Nothing. Without a solid foundation, all you’ve got are crumbling dreams and ruined ideas. Escape this bleak future by setting clear financial policies before you start a business.
This avoids confusion and establishes firm-wide transparency and accountability.
If you really want your staff to stick to your policies, they have to be easily accessible, for example, on the intranet, and easy to understand. Now is not the time for lawyer-speak.
Investment in Accounting Software
Accounting software has saved many a law firm’s bacon. Prevent your bacon from being fried in the first place by investing in systems, such as Sage Intacct’s accounting software modules, from the beginning.
Software must be compliant with industry regulations. Features must be user-friendly to enable all authorized staff to assume responsibility for their role in the firm. Ultimately, you’re looking for software that encourages employees to stick to policies and procedures, while enhancing overall financial management.
Develop an Expense Policy
An accessible expense account for business-related tasks, like 5-star restaurant dinners for schmoozing potential clients is open to exploitation. Safeguard your hard-earned revenue by making it very clear what expenses are allowed, expense limits, and the approval process.
You must also set limits for business spending from personal accounts. Define the reimbursement procedures clearly and check in every now and then to ensure staff follow the guidelines and determine if anything needs clarification or adjustment.
Implement Billing Policies
Everybody loves payday, but they’re not so keen on the other bit. You need billing policies that strongly encourage debtors to make your (pay)day.
Standardized approaches ensure consistent billing, invoicing, and payment terms, as well as accuracy and transparency in billing procedures.
Policies must include procedures for unpaid invoices. They must be fair but firm and easy for clients to understand the consequences of non-payment.
Times they are a-changin’ and so must your policies to ensure they are in keeping with industry standards.
Create a Financial Record-Keeping Policy
Accounting software for law firms is great, except when there is little consistency in maintaining accurate financial records. Not even Sage Intacct accounting software can dig you out of the trench that sloppy best practices carved out for your firm. Well, if anything could, it might be Sage and the right accounting partner.
You can leave the heavy machinery alone if you standardize the maintenance of accurate financial records, but you must specify:
- Document requirements
- Filing systems
- Retention schedules
This, together with regular audits help keep records accurate and ensure regulatory compliance for clients.
Implement Financial Controls
You’re looking for accounting software with features that protect your firm from fraud. Your software package should include the following features:
- Segregation of duties
- Regular account reconciliations
Audits come into play again when you want to ensure the integrity of your financial processes and controls. Scheduled audits are critical when monitoring financial activities because they help identify and prevent risks.
Essentially, you want software that makes it easy to develop and implement financial controls specific to your law firm.
Provide Ongoing Training and Support
A chain is only as long as its weakest link – what a tired old cliche. Unfortunately, it’s true, so you must invest in staff training if you want to maintain a consistently high level of service.
Ongoing training has two major advantages:
- Ensures staff understand and stick to your firm’s financial policies.
- Address issues and answer questions regarding financial policies.
There’s actually a hidden third advantage: It fills staff with renewed confidence in their abilities and productivity.
Regularly Review and Update Policies
We keep mentioning the importance of monitoring, reviewing, and adjusting financial policies because it’s so … important. Some legal processes are so embedded in law, that they’re unlikely to change. But, other parts (digital), evolve rapidly.
Regular reviews keep you on your toes and ensure your services reflect society’s changing needs and align with changing regulatory requirements.
Obviously, you’ll ensure your staff understand the changes and incorporate them into their daily working lives.
Building Secure Foundations
Let’s go back to the strong foundations emphasized at the beginning of the post.
It’s pretty clear why your foundations must be rock solid. It’s also pretty clear that foundations don’t appear out of the ether. You build your foundations brick by hard-earned brick. Accounting software developed specifically for the law industry is indispensable, kind of like the cement that holds all the bricks together.
You can build a stable law firm on clear financial policies and procedures that facilitate effective and accurate financial management. Your policies must be based on transparency, accountability, and compliance. It’s the only way to ensure long-term success and integrity in your practice.
