Cash forecasts and cash management procedures are crucial for law firms in the current market. In the past the consequences of not planning and forecasting were limited but in a fast changing economy and with very real prospects of failure, the consequences are now more severe, with less likelihood of white knights prepared to come to the rescue of a firm in difficulties. Cash forecasting and active cash management now need to be routine and embedded in the normal activities of your firm. Managing Partner and FD Legal's new Cash Management in Law Firms report is written to help you achieve exactly that. The report focuses specifically on: *Identifying and analysing the barriers to successful cash management in your firm; *Developing strategy to overcome these barriers; *Reducing lock-up (work in progress, debtors and disbursements; *Managing income and outflows; *Establishing appropriate funding structures; *Accurately forecasting and planning; *Successfully communicating with lenders - improving the relationship; and *Establishing a firm-wide culture that understands and supports the need for efficient cash management. The report aims to help you establish the root causes of existing cash management problems and set out a clear strategy that will not only reduce lock-up but enable you to seek out profit and business certainty in increasingly difficult times.
Contents Part One: Cash management for law firms.
Chapter 1: Law firms
are different, aren't they? The cornerstones; Cash flow and profit; Who
manages the cash? Times have changed; Business management processes;
Structure and responsibility; Data; The view from the outside.
Chapter 2:
A root cause analysis of key elements that impact cash management in law
firms. Structure - legal and capital; Partner behaviour; Periodic outgoings;
Disbursements and suppliers; Management processes; Clients/bill payers;
Work types/pipelines; Work in progress; Credit management processes;
Cycles and cut-offs.
Chapter 3: Establishing appropriate cash and lock-up
profiles for departments. The practice profit pipeline; The concept of
standards; Case: the pipeline of personal injury work; The market
situation; The issue of mix; Client mix; Specific exceptions; Targets.
Chapter 4: Reviewing current performance and identifying improvement
opportunities. Information design and collection; Identifying action;
Process overview; Implementation of the processes; Interim billing.
Chapter 5: Assessing capital requirements over different time periods Basic
process; Short-term forecasting; Medium-term forecasting; Funding balance.
Chapter 6: Cyclical patterns and predictability of outcomes Outgoings;
Income.
Chapter 7: Managing outflows - suppliers, disbursements and periodic
payments. Cost of sales; Disbursements; People costs; VAT payments; Tax
planning; Capital expenditure and cost of growth; Costs of shrinkage;
Capital repayments to retiring/departing partners; Distribution of undrawn
profits.
Chapter 8: Practical strategies for improving cash flow - partners
and communication. Partners and communication; Preparation; Identifying
opportunity; The 'reason why' Enlisting support; The wider partnership;
Preparing to implement; The role of finance; Managing exceptions.
Chapter
9: Practical strategies - clients and staff Clients; Queries and disputes;
Staff - fee earners and others; Lawyers as people managers.
Chapter 10:
Practical strategies - information and performance management. Key
performance indicators; Matter value estimation and pull-systems; Coding
systems.
Chapter 11: Practical strategies - technique and process. Cash
flow forecasting; Amplitude - peaks and troughs; System usage; Report
design; Upfront processes: client/file opening; Visibility of lock-up;
Progress reporting and early warning; The billing process; The collection
process; Recovery; Payment process; Disbursement payment processes; Simple
changes.
Chapter 12: Funding structures - matching funding to asset types.
The conventional approach; The new world; Usage, risk and price; Balance
sheet funding.
Chapter 13: Managing banking relationships. The way lawyers
were seen; What changed? Banks' behaviour; What do the bankers want now?
Multi-product relationships; What do banks not want? What must you do to
support a healthy banking relationship? Resolving difficult relationships;
Future prospects.
Chapter 14: Looking to the future - plans, forecasts and
resources. Increasing uncertainty; A different forecasting process; Model
contents and impacts; A call to action; Dampen down the cycles;
Longer-term implications; Capital extraction; Viewing the prospects; The
cost base; Model complexity; Maintenance to access funds. Part Two: Case
studies Case study 1: Using case management to pull cash forward. Case study
2: Disbursement funding. Case study 3: Reviewing the work-type portfolio.
Case study 4: A boost to results. Case study 5: Getting a small firm back on
track. Case study 6: Project and process. Case study 7: Client
categorisation. Case study 8: The simplest solution.
Barry Wilkinson is Senior Partner of Wilkinson Read & Partners, a consultancy firm that has been helping solicitors to implement profitability, cash flow and sales improvements since the recession of the early Nineties. He has saved his clients millions of pounds in all parts of their cost structures and put even more into their bank accounts through creative cash flow programmes. With an unusual ability to bring partners together to move their firm in an agreed direction Barry's recent successes include helping a client to reduce their 'lockup' by GBP270,000 in a six week period, and helping another to generate GBP200,000 more profit than expected over four months.
