Many law firms use QuickBooks accounting software. However, not all users take advantage of its full functionality. Click below to discover some Best Practices for getting the most out of QuickBooks for your practice.
Growing Firms Can Avoid Nightmares by Establishing Key Policies
Firm growth is a sign of success. Adding attorneys, gaining more clients, and expanding into new areas of law are great for your practice. The last things owners are probably concerned about during growth periods are administrative issues that are likely to arise 10 or more years down the road.
But laying a good foundation now will avoid some scary problems in the future. Establishing solid business systems is a challenge for new and evolving firms. As a special Halloween treat, I offer some helpful nightmare avoidance tips garnered from 18 years of law firm management experience.
Nightmare #1: A basement full of skeletons
Most experienced attorneys have skeletons in their closets, basements, attics, and even cars. I’m talking old files. Boxes and boxes of them. Establishing and following a file retention policy will help avoid the nightmare of being buried alive in all that paperwork your firm produces. The policy should establish a procedure for closing files, documenting their location, and identifying when files are due for destruction.
Nightmare #2: An inventory of ghosts
Inventory “ghosts” come in two forms: 1) unbilled time (WIP) that’s never going to be billed, and 2) aged accounts receivable (AR) that’s not likely to be collected. If WIP and AR are not handled appropriately, you will have assets on your books that aren’t real. Don’t let uncontrolled inventory ghosts haunt your ability to correctly evaluate your firm’s financial position. Following a strict inventory management policy can act as your “ghost buster” by establishing a systematic method of dealing with aged WIP and AR.
Nightmare #3: Cobwebs in your IOLTA account
Over time, “cobwebs” tend to develop in IOLTA accounts. These webs are made up of funds left behind by “spiders” such as uncleared checks, unclaimed escrow funds, and unused retainers. If you do not have a system established for regularly cleaning out your IOLTA account, then you may be walking into gobs of cobwebs at some point. Establish and follow a policy that includes monthly reconciliations and annual unclaimed funds audits. A procedure for attorneys to review client trust balances with each billing cycle can also exterminate the spiders from your IOLTA account.
Firms that establish and follow policies like these will create a smooth path for administrative efficiency, reduced overhead, and financial success. For assistance in establishing practice management policies for your firm, contact T2 Management Solutions at 814-572-2294.
This year, the loss in productivity for small US businesses due to inefficient administrative management will be a whopping $335.3 billion (Miller & Wongsaroj, 2017). Does your firm contribute to this loss? What can be done to reduce the amount of time spent on administration and increase the amount of time that can potentially be spent on operations and revenue generating tasks? How can you work smarter?
With technological advancements, automation is a significant time saver for small businesses and sole proprietors. Unfortunately, resistance to automated processes and lack of awareness for how to begin more automated and time saving methods of administrative management can result in a significant loss of time. As a result, productivity is hindered due to time lost that could be spent on other areas of business such as revenue generation and operations.
In 2017, Sage, an enterprise resource planning software supplier, funded a study to assess the amount of potentially revenue generating time that small business owners spend on administrative tasks and the significant benefits of automated processes. Plum, an independent consulting firm, conducted the study of over 3,000 companies across 11 countries to assess whether technology can be used to reduce administrative burden.
In the United States, 4.9% of small businesses’ work-time is lost to administrative management resulting in an implied productivity loss of $335.3 billion dollars annually. For the sake of this study, administrative tasks have been narrowed down into the following 8 areas: talent acquisition, tax accounting, generating invoices, payroll, processing invoices received, HR, chasing late payments, and general accounting. The simplest resolution to a business owner spending too much time on administrative functions without employing a dedicated staff member to handle them is to automate as many functions as possible in an effort to make administrative work more streamlined and easier to manage. With hundreds of automated programs available, much of the routine administrative functions that small business owners typically take upon themselves to perform can be done automatically or with little effort and time required.
Many firms are resistant to implementing an administrative services management software for a variety of reasons, most commonly business owners may dislike change, distrust automated software, or be hesitant to take on the initial cost and time. Additionally, many firms may not know where to start or what products are available. However, businesses do not need to go into automation blindly. Administrative services firms and ASO’s can refer businesses to automation products, aid in getting the business set up for automation, offer training on implementing automation software, or even take it on completely. It is advisable to conduct an audit of time and money spent on administrative tasks and compare to the cost and time required to implement a new program and especially the cost and time required as automation is streamlined. With a wide variety of programs for administrative services available, the failure to implement a more streamlined business strategy through the aid of automation oftentimes results in business owners wasting their most valuable resource, their own time.
Miller, Tim & Wongsaroj, Sarongrat. Sweating the Small Stuff: the impact of the bureaucracy burden. September 2017.
Many attorneys have IOLTA accounts that were established well before the bookkeeping technology we have today was available. Oftentimes, the balances in these accounts do not match the total of the individual trust ledgers. There are a variety of reasons why this happens.
T2 recently presented a program for the Erie County Bar that defines a step-by-step process for cleaning up IOLTA accounts, reporting unclaimed property, and establishing methods for ongoing account reconciliation. Click the link below to download a copy of the presentation.
Attorneys who hold money in trust for clients know exactly what IOLTA means: I Otta Look at That Account! Right?! If you did, it is more than likely that you would have trouble reconciling the IOLTA bank balance with your trust account ledger. Especially if you began practicing with hand written ledgers and manual check registers.
T2 has a proven 10 step process that will square-up your IOLTA and establish a fail-proof system for maintaining accurate trust account records going forward. We will also help you report unclaimed funds to the state. Don’t waste your own or an assistant’s time trying to figure it out. Quit worrying about how to deal with that excess cash. Let our experienced “escrow eliminator” do it for you. Who knows – some of it may belong in your pocket!
Contact us at firstname.lastname@example.org or 814-572-2294 for a free initial consultation.
Are you contemplating a new business, adding a product line, or just need to clarify your organizational focus? If so, click here for help with answering the four main questions that build a strong foundation for a business or marketing plan.
Small Business Week is April 30 - May 6, 2017 & celebrates our Nation's small business owners & reminds us to follow our dreams!
What do Lean, Six Sigma, and Total Quality Management have in common? Read our next article to find out!
For more information on why more law firms should perform an operation audit and how T2 can help achieve the best results:
Active social media accounts allow real time conversation between a business and its audience. This connection is crucial in building brand awareness and customer loyalty. T2 associates can help by creating an editorial calendar, crafting and curating posting content, scheduling content to be posted, tracking post engagement, and taking action accordingly.
You may have a great website, but are potential customers able to find it when seeking your services? T2 can perform an internet presence analysis and make recommendations on how to increase your visibility on the most popular search engines and social media platforms. We can also help implement a social media plan that will keep you in front of your target audience.
Studies have proven that the most effective marketing strategy is excellent work and customer service. For busy professionals, this includes responsiveness in addition to quality. Do you want to improve the work quality and responsiveness provided at your practice? T2 can help.
August 25, 2016
Methods improvement is not just for manufacturers. Whether you call it Lean, Six Sigma, or TQM, workflow analysis can streamline processes, improve service quality, and increase productivity. T2 is experienced in using scientific management tools such as flow charts, pareto diagrams, and fishbone analysis in the service industry. Contact us today for more information.
August 18, 2016
It is critical to the success of any business to hire the right people and assure they understand what is expected of them. A job description is a tool that defines the required experience and skills for the position as well as the essential duties and responsibilities. They are essential for recruiting and orienting new employees, establishing compensation plans, and managing performance. In addition, job descriptions are instrumental when dealing with workers’ compensation, disability, and EEOC issues.
August 4, 2016
For practice owners, your destination is the net income that becomes your annual wages. The journey can be stressful without a guide to keep you heading in the right direction. We can create a budget that forecasts monthly operating revenue and expenses. Regular comparison reports will act as a GPS and keep you on your route to a successful year. T2 consultants have extensive experience in building accurate budget models. Let us help reduce your year-end stress and square up your business.
June 23, 2016
Oftentimes, professional offices do not take full advantage of the efficiencies their technology has to offer. Old habits are hard to break, and change is usually difficult. T2 can identify and help to eliminate the old habits so that your technology investments will work for you as intended. Contact us for a free consultation.
May 18, 2016
The Department of Labor has issued a new rule that increases the minimum salary threshold for exempt employees. Business owners need to properly designate a status of exempt or non-exempt on every employee’s job description and pay them accordingly. T2 can provide you with the tools you need to stay in compliance with this and other FLSA regulations. Click here to find out more about this change.
May 27, 2016
Satisfaction surveys are a great way to stay in contact with your clients and generate repeat business. T2 Management Solutions can assist you with creating, conducting, and following up. Click here for more information and Contact us today for a free consultation.