In this video, Linda Ardasani of Ardasani Accounting and The Proper Trust walks law firm owners through a systematic approach to managing cash flow. She begins by encouraging firms to define personal and revenue goals, then shows how QuickBooks Advanced can track revenue by practice area to inform marketing. She stresses the importance of scrutinizing expenses—identifying wasteful spending such as excessive meals or office supplies—and using benchmarks from comparable firms. The discussion moves to calculating the break‑even point and forecasting future cash needs. Ardasani outlines a budget strategy that includes creating a QuickBooks budget, importing prior year data, and running budget‑vs‑actual reports to catch overspending early. She then covers marketing lead tracking from the first contact through client onboarding, and emphasizes robust accounts‑receivable processes: automatic invoicing, payment plans (e.g., via Gravity for immigration cases), and automated reminder workflows in QuickBooks. Finally, she recommends outsourcing collection calls when needed and positions her firm as a resource for firms struggling with open AR. The video ends with a call to action to subscribe and contact her firm for assistance.
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Hi there, Linda Ardasani from Ardasani Accounting and The Proper Trust. Today we're going to talk about some steps to be able to manage your cash flow at the law firm. Running a law firm is a lot of work, and cash flow is critical. The major reason is you have to pay your staff, which is typically your largest expense. But if you don't have money coming in, how are you going to pay your bills? So making sure that you have good eyes on cash flow and that you have enough cash coming in is critical. So when we talk to lawyers, we try to sit down with them and not only give them a cash flow report with the inflows and the outflows, and then we talk to them about what maybe they're gonna have for bigger purchases. But we start really with, what are your revenue goals? And revenue goals actually back that up a bit, and we'll start with a conversation about what are your personal goals? People are very open talking about personal goals, and you almost see the smile on their face like, I wanna, I wanna make, you know, X amount of dollars. I wanna do this. I wanna do this charity things. I don't wanna work so many hours. You'll see their face light up, and that will lead into their revenue goals. And then you could sit down and really analyze revenue, which in QuickBooks you have the ability to track that on an individual card if you're using QuickBooks Advanced. You're able to do the tracking of revenue by type, and you'll be able to see what maybe is more profitable. If they're a family law firm, is divorce more popular, more profitable than maybe child custody? Start to see, and then you'll be able to target the marketing. So these are the things that we do as we help our clients get their cash flowing in the door. And obviously with marketing, you're spending money, and you want to track the lead from the get-go. You want to track it from that first phone call or that first contact form all the way through the process of whether they hire the firm or not. You want to see where the stopgaps are if they're not hiring your firm and going elsewhere. Then once you've got the revenue goals in place, you want to start to look at tracking the expenses. And I think that sometimes it's something— as the firms are larger, it's definitely a harder job to be able to track all the expenses in a law firm. And sometimes it can be a matter of what are they doing? They're spending a lot of money on Amazon replenishing the office for what? And you'll start to look these expenses that are coming along that, like, there's an awful lot of money going out the door for meals, for example. Where are all these meals? And the firm is paying for it. So you want to know why that's happening in the law firm. You want to see it and understand where it's coming from. This is why it's pretty important to hire a bookkeeping firm or an accounting firm that works with multiple law firms so we can kind of get percentages. So maybe we're looking at apples to apples with 2 law firms, and we can kind of look at which one's having more money spent on meals, for example, or marketing, and you can get a good gauge on that. Of course, you can get benchmarks as well, and in QuickBooks Advanced they have that too. So after you track your expenses, you want to identify any cash flow needs. That can be anything that you need to purchase above and beyond down the road. But you want to know, as a business owner, you want to know that break-even amount. How much money needs to walk in that door to just stay level and not, not even make the profit, but just stay in a place where you're making enough money that you can pay everybody. Your bills are paid, your loans, everything's paid, and you don't have any profit at the end. But at least this way, the business— you want that number. So that break-even amount is important to know, and every business owner should know it. And then you wanna start to work on a budget strategy. So you want to start to say, okay, so we noticed that meals were really crazy, or Amazon really crazy, lots of money. Everybody's ordering it for each section of the office. That's gonna stop. We're gonna put a real stronghold on this, and things have to be approved along the way. And this is how much it's budgeted for that. And then they would— they stay within that budget of how much is gonna be spent for the year. So it doesn't get to be an open-ended credit card that's just like, we can just spend as much money as we want. So you wanna have that budget strategy with some forecasting in place so you can kind of track it, which leads down the road of creating a QuickBooks budget. So you can take last year's budget and import it in to make this year's budget, and then pull that down and meet with the team, the staff, and go over why things are gonna shift and how much money is going to be spent. And then you're gonna run that budget versus actual report to see how you're doing. If anybody's really breaking the rules and still spending a lot of money on meals or on Amazon, you want to know that so you can start to, start to have the conversations to stop that happening and that money leaking out the door when it starts to happen, and not at year end when you're, you, you can't even mandate it anymore. You want to know your clients. So this comes down to marketing. You want to know what is— when you're onboarding that new client, you want to know who you're dealing with and are they reliable payers. So if you're doing accounts receivable, you want to be able to see that if you have an accounts receivable type of practice where you do have hourly billing that's not paid by trust, you want to see that the clients are paying on time. Or maybe you have them prepay if you can, depending on your state rules. But you really want to make sure that you've got a system in place with automatic invoices, maybe a credit card in place to pay when the time happens where you've done the work and then you charge the credit card, or you can do payment plans depending on the type of law you practice. Maybe it's a law that's being practiced that's immigration, so you set up that kind of a payment plan along the way. We do that with Gravity all the time where you can make multiple payments to pay for the entire amount that they're getting at the end of the day because it's expensive and Most of the immigrants don't have a lot of money, so they make payments and it's all set up through a payment plan. You want to improve, improve your collection processes. This is big because we pull up new files all the time and we look in that over 90-day category and we're kind of like mind blown that there's a lot of numbers and a lot of open invoices that haven't been touched. No one's called, no one's reached out. A lot of times you're just emailing out the invoice and no one's followed up on it. And sometimes emails get lost. They get lost in my office. They get lost. So you want someone to follow up. You could automate that inside of QuickBooks. There's workflows in QuickBooks that will automate and remind somebody if the invoice isn't paid on time. It can remind it when it's almost due. It can remind it when it's not paid on time. And then of course there's other methods out there to be able to start to get— make collections, whether you're making the phone calls yourself or you're going to somebody outsourcing that. For sure. So that's where you're really utilizing your technology to work for you. So that means that if you set up the workflows properly, you don't have to do anything. If it's set up that you have parameters and conditions in there, if it's under a dollar, you're not gonna go bother and have that automation reaching out to a client and, hey, you didn't pay when it's like 29 cents. That will irritate a client. You can set up and finesse those rules. To make it work for you. So it's important to streamline your law firm's collections process. It's something we help our firms do, and it's really essential to the success of the law firm down the road. It's something we help people with. So if you're interested in that kind of help, if you have a lot of open AR and you need help with collecting it, we are just a phone call or a contact form away. Something we do at our firm. If you're interested in staying in touch and listening to more videos, be sure to hit the subscribe button. And on that note, I hope you all have a wonderful, wonderful week. Bye now. Bye.
