Law Firm Budgeting

Hi there. Linda Artesani, Artesani Accounting. This week we're going to talk about budgets and law firm budgets and how can we use a budget to our best capability to help our firm become more profitable. There's always a chance that you get expenses kind of get bloated. The bigger firms, you really want to look at what your— if your employees have credit cards in the firm, what are they spending the money on? You really wanna track that, and maybe this is a great time to do it. And we like to use Divvy as a source and Relay. Both of these products are pretty good. You can give individual accounts with a cap, and then they can use that for spending on client costs, for example. Now, when you're looking at the budget overall, you're probably sitting down with your tax person this time of the year, and you're looking at the expenses, and you're looking at the revenue, and you're probably going, where'd my money go? So this is a great time to have that conversation with the tax professional, have it with the bookkeeper on staff. And if you're doing your own books, you probably need to just sit down. And one of the best things you can do if you're going to sit down and look at your records, this is going to sound old school, but it's really, it really gets you in a great place if you just grab your bank statement, grab your credit card statement, grab a highlighter, start to highlight your major expenses, the money going out of the firm's operating account. start to look at the credit card and examine each credit card with each staff member. See where the money is going out. Software is another category that we see a lot of money being spent, and maybe it's not necessary, or maybe you're paying for a seat on legal software. You should have legal software, but if you have legal software and you're looking at 10 seats and there's only 5 people working for you, then— or 5 users— then maybe you need to go back and maybe bring that down. So there's so many places inside of a law firm that you can start to really contain expenses and just track them. It's very eye-opening. It's very cathartic to sit with that balance, that, that the statement, and sit with a highlighter and just highlight. It can almost be— it'll be very eye-opening, but it's also a really good action for you to get a grip and a handle on the expenses for your firm. That's the most important thing, is getting that grip and know what you're— where the money that's going out the door, is it being spent effectively? Maybe there's a way you can start to streamline some of those expenses and to really capture them. And then if you're looking to run a profitable firm, then we can start to talk about cash flow and other ways, which I'll get into next week, how we can just really keep an eye on it, especially if the economy starts to go a little slow. So I hope that's helpful to get you just that little push to get you to look at maybe doing a budget. And it's a simple click on a, on the In QuickBooks, you can just click and populate one from last year's profit and loss, but I really recommend sitting with a, with the paper and a pen and just writing down your numbers and just looking at them and writing it out. I know that sounds old school, but it's sometimes very helpful to really get a handle on where you're spending. And then you can go back to your accounting software and just kind of dig deep and see where those things were. You can look at software, kind of expand out that category, group it, And take a look or have that conversation with your bookkeeping professional that can help you with that. If you want to learn more, hit the subscribe button, follow me. Love to hear your comments. And on that note, I hope you all have a wonderful, wonderful week. Bye now.