What management reports do sole and small firm practitioners look at to determine how well they’re doing?
Your question is a very good one. There is much data out there … and most good systems can and do produce far more information / data than an attorney can use .. or assimilate intelligently.
Decide what it is that is important to you … to help you reach your goals … and then look at that information.
First, and foremost, in my mind, is the development of a cash flow statement. Prepare a forward-looking budget of cash receipts and payments for the next 12 months. Keep that statement on a rolling 12 month cycle such that as you conclude the current month, you look at the 12th month and add it into your budget, adjusting all the other months if needed based on new information.
Next, keep your aged accounts receivable listing always at your elbow to make sure that your clients are paying you in accordance with their agreement. If they don’t, “fire” them and move on to the next client … Don’t let them waste your time or build up the amounts they owe you.
If you do these two things, you will be far ahead of the curve.
You can look at other areas of measurement as well such as realization rate (both definitions re write-offs before billing and uncollected billings). Look at your bank balances, obviously. Look at how quickly your clients pay … what is your accounts receivable turnover?
All these, and other metrics are important. But, …..
Spend your time focused on marketing for new work, doing the work brought to you, and collecting that which you billed. The rest will fall into place.
You might keep an eye out for Juris, Inc.’s new survey of small to mid-size firms. A more complete answer to your question will show up in their results.Tags: Cash Flow - Finances
Categorized in: Cash Flow - Finances