The following points are (early) New Year resolutions and best practice reminders to help your firm during these challenging times.
Tax payments
Despite these difficult times, some practices may have experienced (often due to cost-cutting) improved results in the basis period 2009/2010. This will lead to increased tax liabilities at the end of January; all the more reason, we say, to focus on those who owe you money and WIP values being carried. Especially as there are only four full business weeks left until the tax payment is due.
Therefore, the Menzies Legal team recommend that you focus on the following:
Improve your credit control
In the current economic climate, cash is king. Ensure your credit control department is adequately resourced and supported by all fee earners. Monitor your collection procedures to speed up collection of fees and thereby reduce the potential impact of bad debts.
Work in progress (WIP)
Ensure all fee earners are fully recording their time and not making billing decisions when posting time. Agree in advance with your clients to interim bill and always bill at the height of client’s satisfaction, at the completion of a good job. You are more likely to be able to bill your full costs and you will collect your cash quicker. Fee earners should be regularly reviewing the WIP on their portfolios for billing opportunities and looking to hit billing and WIP days targets.
Sectors
Monitor your combined WIP and debtor exposure to clients in sectors that are particularly struggling in this present economic environment.
Exposure limits
Set limits for exception reporting where combined WIP and debtors on individual clients is too high.
Communicate with your clients
Regularly communicate with your clients to keep them fully informed of all matters and aspects of their cases and assignments, and get agreement to any additional costs before they are incurred.
For more guidance please contact Peter Noyce on 01483 758915 or email pnoyce@menzies.co.uk. Alternatively, please contact your local Menzies LLP relationship partner.