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Cash flow management for law firms: How to secure your law firm’s cash flow ahead of a difficult 12 months

In the wake of the Covid-19 pandemic, and with the spectre of a global recession looming, finances are a growing concern for law firms large and small. The Solicitors Regulation Authority reports that a particular set of circumstances – including the pressure to repay the government’s Covid support packages and a lack of appetite to provide additional funding by high street banks this has led to a recent spike in law firms declaring some financial difficulties. 

While there is little that can be done to mitigate the recession or the cost-of-living crisis, the good news is that with careful financial planning, cash flow management and law firm funding options, it will be possible for many law firms to ride the storm of the next 12 months whilst also spreading liabilities away from their primary bank. 

Here we’ll explore the art of financial planning for law firms, outlining your options for managing cash flow and budgets for the coming year.

 

Cash flow management on laptop

 

Financial planning for lawyers: all you need to know

Law firm financial management is a requirement under the SRA Standards and Regulations 2019. It’s your responsibility to monitor your financial situation and business viability, which includes identifying financial risks. Of course, carrying out this duty will also help you to keep your law firm credit in the black and secure your future.

  • Law firm budgeting is an essential component of financial management. It should include all of your predicted expenses, including projections of seasonal spending. This will help you when managing cash flow.
  • Your financial plan will set out how much income you need to bring in, set against your law firm expenses. You can then work towards monthly revenue targets, which will help you to ensure that your firm remains profitable.
  • Financial projections are a realistic estimate of the income you are likely to achieve, based on how much you are currently charging, and how much work you predict that you will be able to take on.
  • Even if you are on target to make a profit, cash flow can often be an issue for law firms. If you are needing to spend beyond your means during certain peak periods, you will need to find a sustainable way to fund this.

 

tall bank buildings

 

Cash flow management for law firms

Cash flow comes down to having enough money in the pot to meet all of your expenses. The trouble comes when the money doesn’t come in at the right time to be paid out again, even though on paper you should be able to afford to meet all your costs. Law firm cash flow issues may occur if you don’t get paid until a case is over, or if several expenses all come in at once, such as staff salaries, VAT and corporation tax. 

One of the most popular forms of cash flow management for law firms is to take advantage of finance options. Taking out a short term business loan, such as a VAT loan to cover the cost of your expenses can be the easiest and most cost-effective approach to managing cash flow. 

acorn business finance

 

Law firm finance: options to improve your cash flow

There are a number of choices when it comes to law firm finance.

  • VAT loans are designed to cover the cost of this quarterly expense. This can help to free up the cash flow within your law firm.
  • Other business loans can help you to spread the cost of different expenses such as practising certificates, professional indemnity insurance and more.

 

Find out more

For more information about VAT loans and business loans from Acorn Business Finance, contact us on +44 (0) 1242 395507 or email hello@acornbusinessfinance.co.uk 

Alternatively,  you can read more about the other business loans and products we offer.

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Get in touch

To discuss financing for your business, contact us either by phone 01242 395 507, email hello@acornbusinessfinance.co.uk or book a callback.

Please note, calls may be recorded for training and quality purposes.

  • +44 (0) 1242 395507
  • hello@acornbusinessfinance.co.uk
  • Suite 1.27, Clockwise Offices, Festival House, Jessop Avenue, Cheltenham, GL50 3SH
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Acorn Business Finance strives to provide clients with the highest level of service. If you feel that our service fails to meet your requirements and you would like report a complaint, get in touch via hello@acornbusinessfinance.co.uk

Acorn Business Finance is the trading name of SJT Corporate Finance Limited. SJT Corporate Finance is registered in England and Wales, number 10919713. Registered office, Festival House, Jessop Avenue, Cheltenham GL50 3SH. SJT Corporate Finance Limited is authorised and regulated by the Financial Conduct Authority, reference number 822913. We are a credit broker, not a lender. We work with a panel of lenders who may pay us a commission. This amount varies between lenders.

Eddie

Eddie

Eddie brings a wealth of experience and knowledge from the finance sector.
Since building up and successfully selling on his own vehicle leasing brokerage, he joined Acorn Business Finance 5 years ago as a consultant covering the North of the country. Based in South Cheshire, he is ideally located to assist SME clients
around the whole area. 

He enjoys building long term relationships with clients and helping them achieve their targets by providing creative funding solutions and watching their businesses grow. Outside of work Eddie enjoys escaping to North Wales to get wet and cold up various mountains, sampling some good food and beer once he gets down again, and spending time with his family – mainly chasing his 2 young sons around.