Track Your Law Firm’s Finances
by PracticeLeagueIt is important to track and measure how your law firm is doing from time to time and comparing it with your performance last year at the same time. Tracking the sectors and practice areas that are most profitable for you with their growth pattern.
When it comes to finding out whether your firm is doing well or not, the one main factor to consider is profit. To get an estimation of the profit you are making, you need to ensure that you are efficiently tracking your law firm’s finances and keeping track of the earning and expenditure on a monthly, quarterly and yearly basis.
It is very important to understand where your law firm stands when it comes to finances and what your overall concept of profitability is. There are also typical legal billing variables that need to be considered – billable rates, the billing rate and the collection realization rate.
Other important financial metrics that are extremely necessary to track include:
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Billing across each Resource, Team and Partners |
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Account Receivables with ageing |
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Work in Progress |
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Effective Realisation Rates |
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New matters across Practice areas |
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Write-offs (including write-offs on account of resource inefficiency) |
Apart from earnings, tracking expenses is another important part of ascertaining whether your firm is making any profit at the end of the year. You have to get an estimation of your firm’s typical monthly cash flow and reconcile advance received and actual expenditures, to understand how much money you have left each month end.
But tracking these metrics are easier said than done. So, why not use a legal enterprise software that can help in tracking your law firm’s finances in real-time and much more efficiently.
