Now that spring is officially here, you may be planning to spring-clean your home. But what about your business? Accountant Rosy Rourke highlights eight elements of your business to address.
1. Costs and suppliers
Review your costs,
particularly if they have not been considered for some time. Are you incurring
Ask your people what
resources they use, and how often. Are you paying for technical subscriptions
that are rarely used? Are there duplications within what you are paying for –
such as both paper copies and online versions?
around continuing competence. Is there a policy for approving training expenditure?
Consider more cost-effective options, such as webinars or in-house training
tailored to your firm’s requirements, rather than costly external courses which
may not be completely relevant to your business.
Other costs to review could
include mobile phone contracts, energy suppliers, and even bank interest rates
2. Work in progress
We recommend billing
on at least a monthly basis on matters which allow this. Ideally, bills should
be raised mid-month to ensure receipt by clients before month end: for business
clients in particular, this makes it more likely that you’ll be paid in an
earlier payment run, aiding cash flow.
Work in practice
should be reviewed every month, and irrecoverable amounts regularly written off
– this should not be a once-a-year exercise.
3. Charge-out rates
Review the marketplace
and compare your standard charge-out rates to other competitors, particularly
if your rates have not increased recently. Could you introduce a higher rate for
higher level, specialist work?
4. Outstanding cheques
cheques as part of your month-end routine. Write back any old cheques to the
ledgers and deal with them appropriately – don’t leave them as unresolved
balances on accounts.
Have an actual spring
clean! Review the paper files that you hold in your offices and establish a
file destruction policy. Could you implement a paperless
office system, where documents can be stored electronically?;
6. Secret profits
Make sure you are not
generating ‘secret profits’; if you are, you are not complying by the SRA Code
of Conduct. The most breached is around disbursements: if a firm incurs a sum on
behalf of a client and passes that directly onto the client, that can be
classed as a disbursement, but any increase in the actual sum expended, is a
profit to the firm, and should be described as such on any bill. Examples of
common secret profits are, copying charges, telegraphic transfer fees and
7. Client care letters
The starting point of
any engagement with a client is the client care letter: this is the document
that will govern your relationship. Review your standard templates for
appropriateness, and that any reference to polices or accounts rules are up to
date and correct. This may include payment terms, interest or commissions
policies, and charge-out rates.
8. Residual balances
Implement a client
file closure policy which ensures balances are returned to clients when matters
are concluded – this will prevent new residual balances occurring. Circulate
residual balances around fee-earners at least once a month, and ensure
accountability between peers if balances remain unresolved. Obtain client bank
account details at the outset of matters to allow ease of repayment of small
In terms of old
balances, focus on balances that occurred post-14 July 2008: the date the rules
changed, and when your obligation to return balances commenced. Aim to resolve
a set number per week, working methodically, and if you want to pay any amounts
over £500 to charity, don’t forget to request Solicitors Regulation Authority
These tips may seem simple and basic, but if you get
your policies and systems right, it will help you manage your practice more
effectively – this spring and beyond.
Armstrong Watson’s update for the Small Firms Division on the spring budget
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