Law firm budgeting

Hi there, Linda Artesani, Artesani Bookkeeping. This week we're going to talk about law firm budgeting. Exciting, right? No, probably not. Most people don't like to even think about using the word budget at all. I talked to the attorneys and we start to get with our clients at this time of the year to kind of button up the year and start to look forward because as accountants, we tend to always look historically. We like to start to think about maybe looking forward into the future. Maybe they had a great 2020 and we want to look at maybe having them have a great or even better 2021. So a better way to approach the client is to call it, let's talk about your financial strategy. See the power of words? It can make a big difference, right, in that conversation. Let's talk financial strategy, and that will include looking at the numbers on the books as they stand today and what we want to spend next year and really analyzing what's there. So start to look at the profit and loss record. Look at that report. What did you spend on marketing? What did you spend on wages? What did you spend on fixed fees that are fees that you have to spend, like insurance and things like that? But there's ways of sometimes lowering those costs. Start to look at your equipment. Is your equipment old? You have old printers, you know, you probably need to change or maybe think about getting new equipment, maybe new computers or whatever you think you might need. Those are things you want to look at now, especially if you had a prosperous year, maybe get those expenses in this year. So we can kind of lower down some of the fees that you spent, some of the money that you're going to have for profit at the end of the year that you're going to be taxed on. So those are ways to kind of work to help your client with the financial strategy to help them really make better use of their funds. Nobody wants to spend a lot of money on taxes. Let's face it. So let's get into QuickBooks. I'll take you through a little bit of the steps that we do. I want to show a really cool app that I have that I'm using now. It's called Collaboard. And it's pretty cool. It's a whiteboard. And we're going to be able to use this in meetings with the attorneys. When we start to formulate a budget, it's our job to kind of put the numbers together and get the budget together for them. And then we do a group meeting with the partners and say, here's what we're spending on X, here's what we're spending on Z, how can we reduce these costs? And then get the feedback from them on what they're looking at, what they're thinking about doing for next year. Get into the revenue conversation. What are their revenue goals? These are all things that we'll get into the following week when we get into forecasting. But it's all— they kind of go hand in hand, the budgeting and the forecasting, or just go together. together. So let's get into looking at QuickBooks, how to set up a budget so you can look at the past to forecast the future. Let me share my screen. So if you've not gotten this deep into the advisory services that we can offer as accountants and bookkeepers, this is a great place to start. All my clients, QuickBooks Online Advanced. We don't dance around in Essentials or, or Simple Start. They just don't fit our, our client, our client base. We use QuickBooks Online Advanced because it's got all the bells and whistles, and Fathom is one of the bells that I'm not not a big fan of. I'm not a big fan of because of the way it presents itself and there's pieces of it, but there are parts that I really like, and the goals report is one, and forecasting is pretty cool. So how to create a budget for your client is just going to come over to this gear. So remember, this is my demo file, my demo advanced file, and it's not full of a lot of data, so we might not get great results when we go into budgeting. So you're going to come over here to the gear. on the right-hand side, top right, and there's a place here for budgeting. So add a budget. You can have multiple budgets, which is really cool in Advanced. I'm going to write 2021 budget for 2021. And let's use it on the fiscal year through— let's go through March 2020. So we're just going to do like a quarterly budget, and we're going to prefill the data. And we're going to say yes, use the actual data from 2021. It's because I think I have more in here on that. And then subdivide, you could subdivide by class or location. I'm just not going to subdivide right now. So let's see what we get for the budget. I know I have more data in 2019. And you can start to see here's the columns, you know, the immigration income. And if you start to break out the income to see where the income is coming into the firm and what you might want to set as goals for next year. you might want to do just an analysis on the various income types per, per client. So you could go through your client because a lot of them do multiple practice areas. Take a look. LeanLaw is great for this. They give you this, the metrics, right? You can pull that out of LeanLaw, get those metrics and start to analyze which ones were more profitable, which ones were not as profitable. Then have that conversation with the client. Say, look, I know you love to do this type of practice, but you're really making more money here. And that's sometimes a real eye-opening conversation with the client. You can see here, we can go into the expenses now. So we can see that advertising marketing was this, this in May, and you're getting an idea of what the budget would be for the next year. And I can come in here and just change this to be whatever I want. I could maybe say, I want to spend more money, I need to— I want to increase my revenue, increase my growth. So I'm going to make this $200. I mean, it's kind of a low number, but you can see you can copy that across. So if I want to, I can copy it across to all the months. And now all the months, it's kind of evened out, $2,400. You can start with just something simple like this. It's a very simple budgeting tool. But it's effective, right? So maybe you're, you know, parking's kind of something you can't change. Accounting, I don't want them to change, but maybe I've been changing the price, the pricing. So they want to see, you know, this might be $695 a month. This would be for a really small client, but maybe I'm charging them $695 a month and first of the year came and I might want to charge them more. So I can copy that, copy that across for all the months. So now I can see what I'm spending per year. And this is really a good way to kind of look through here. Getting into the travel and all that, looking at last year might be different because of COVID So you want to factor that in that you might want to go back a couple of years to get an idea because we're hoping we're going to get out of this area where we don't travel, we don't do a lot of, we don't do a lot of customer meals because the restaurants are closed. So you want to look at that as well and kind of put on that lens of seeing the future and seeing what you might be hoping or expecting in 2021. Rent's pretty fixed, a fixed number for you. Business meals, maybe an area where you might be able to improve on. Dues and subscriptions. These are just some places. Office supplies and software is a big one. Look at what they're spending, kind of dive in, pull the detailed report out, have that ready in the meeting so you can show them this is what you're spending and these are the apps you're spending money on. And it's recurring expenses, and maybe you're not using the app at all, and they might even say, what the heck is that, Linda? Can you look it up for me? And then you look it up and say, okay, I'm not using that, can we cancel that? Those are little areas of ways you become that that superpower to help them lower their expenses, increase their revenue, and make things a lot better for them. So let me move on now to going to that Collarboard app so you can see what it looks like. Now here's my Collarboard app, and I just took that budget that we just kind of fake created and uploaded this as a PDF. You could use an Excel spreadsheet, but for here I just want them to have the ability to write notes So if I wanted to grab my pen icon, I can come over here and pick my pen and say, you know, this is— this expense is a little bit high and maybe we need to reduce this. And then everybody can be on a Zoom meeting and work on this file itself. Maybe you want to add a note here and I'll just say, you know, maybe check on travel expense. For XYZ or whatever. And you can put that— maybe it's for the attorney. Oh, for the attorney name, I'll make this bigger. Oh, I didn't realize I could do that. Kind of cool. But then I could stick this note, right? So now I've created the note and I can move it around. I can actually take this note and move it to— looks like I made a line here. I'm new at this, this app itself, but you can put the app— you can put the note anywhere. So I could add that note anywhere. Um, I thought I could move these. Yeah, I can move this around over here and maybe make this attached to, attached to travel here or whatever. I don't know what the lines are for, but I'm sure I could take the pen and just, you know, I can take the pen here and just kind of like travel is, you know, car rental travel was too much. And maybe I want to take my pen and just write on it. And this is something you can actively collaborate with a partner. You can actively, actively collaborate with working with a partner or a team member. I can just circle this and then, you know, star this. It's just like having a whiteboard and being in the same office. That's what's really cool about this. Is that I'm able to collaborate with the partners. We're all in different locations. I'm in Florida, many of them in Texas or California or Vegas or wherever, and I can actually sit and have the conversation with them and just go through this. And it's just really like a scratchpad, but it'd be like if we were all sitting in the same boardroom. It's what I really like about this. I got to learn more about the tools. I have not had a lot of time with it, but, you know, maybe I can add a star somewhere and say, you know, this looks great. I could take this star and stick it wherever I want to. I can shrink the star down if I want to make it smaller. And, um, yeah, I can shrink it down somehow. I should be able to shrink it down and make it smaller and turn it. I don't know, I just got to work on it. But this is a fun little tool to have. I got it on AppSumo. It's very inexpensive. It's still in beta, so it's changing and morphing, but it's a pretty cool tool to have. Hope this will kind of get your wheels spinning on budgeting and working with your clients for budgeting and really getting to that place where we elevate our practice out of just working through the history of the client, working through just entering data and reconciling. I mean, we're past that stage. Technology is on our heels and it's going to automate many of these processes. It already has. So how do we stay above that? By using our brain, things that can't be really replicated by machines and AI, which maybe eventually it will be. But right now, I think we've got some time here to elevate our practice, to continue to make money and continue to do this work. This is the fun and exciting stuff that we went to school for and we learned. Even if you didn't go to school for it, you learned by working with multiple companies and seeing how you can help them grow. When you niche out your practice to one industry, you really get to dive in deep and work with the same industry across the board with multiple clients. You can see what works and what doesn't work. And that's how we can serve our clients best. So I hope that gets you thinking about things. If you're a bookkeeper or an accountant and you want assistance, with learning more about this, join our Facebook group, QB Community Live. We're there to help. You can have more conversations, maybe even deeper ones with this on me there. If you are a law firm or an attorney— if you're a law firm— if you're an attorney that works in a law firm or staff of a law firm and you're like, hey, I think we need help with this kind of work. This is above my pay grade. How do I get this kind of help for my boss or even for the attorney himself that's working here and knows they want to do this because they've had growth and they want to grow smarter? Reach out. We're here to help. Thanks, and thank you for watching, and we'll see you next week. Bye now.