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Optimizing Financial Management for Law Firms: Key Strategies to Stay Informed and Empower Your Firm's Success

Over the past week, we had the pleasure of interviewing Makayla. A successful law firm owner who describes herself as ‘an everyday girl with a passion for law and literature’. Known for her commitment to client services, Makayla highlights that proper financial management ensures she has the peace of mind and capacity to be present for her clients. This allows her to deliver top-tier legal services to them.

When it comes to her literature side, Makayla traces her passion for reading back to her childhood attachment to Dr. Seuss, which is evident in some of the analogies she uses throughout the interview. A perfect ode as we celebrate World Book Day in March.  

As a law firm owner, Makayla understands the importance of staying on top of her firm's numbers. The main points that we cover in this interview are: 

  • Evaluating finance team roles: Assess strengths and weaknesses and assign responsibilities strategically.

  • Streamlining access to financial data: Invest in digital tools and implement efficient reporting processes.

  • Fostering communication: Regularly communicate with your team and ask the right questions for insights.

  • Monitoring progress: Track KPIs and use financial dashboards for real-time insights.

  • Evaluating accountant relationship: Look for signs such as lack of responsiveness or errors in reporting.

Here’s the interview where she breaks these points down further.

Assessing Team Roles: Harmonizing the Symphony

Interviewer: Makayla, thank you for joining us today. Let's dive right in. You've mentioned the importance of evaluating your finance team's roles. Could you give us a deeper dive into how you tackle this?

Makayla: Absolutely! So, picture this: it's like organizing an orchestra. Each member has their own unique instrument, right? Similarly, I assess my team's talents, figuring out who's a master with numbers, who's the maestro of spreadsheets, and so on. Then, I orchestrate their roles accordingly, ensuring harmony in our financial symphony.

Ensuring Data Access: Thing 1 and Thing 2 Reporting

Interviewer: How about data access? How do you ensure everyone's got their hands on the financial information that they need?

Makayla: I like to call data access the bread and butter of our financial management—it's the backbone that keeps everything flowing smoothly. Imagine having digital tools as reliable and quick as Thing 1 and Thing 2 from Dr. Seuss's "The Cat in the Hat." Are you familiar with the characters?

Interviewer: Vaguely, could you expound on that reference?

Makayla: In the story "The Cat in the Hat,” Thing 1 and Thing 2 are these mischievous but incredibly efficient helpers who zip around getting things done in a flash, much like our data access tools do for us. Our tools are our trusty assistants, always on standby, ready to fetch data at a moment's notice.

In a post-pandemic world, our streamlined reporting processes make it possible for us to effortlessly breeze through data access, regardless of our location. Our approach ensures efficiency and clarity, making our financial management tasks a delightful experience.

The top three data access tools in finance and accounting, based on their widespread use, functionality, and how they cater to a range of financial tasks from simple to complex, are:

Interviewer: Are there some tools you could highlight?

Makayla: Certainly! The tools we use vary greatly in terms of functionality, from basic data management and reporting to advanced analytics and strategic planning. However, for us the top 2 I would say are:

  • Microsoft Excel: Honestly, where would we be without it? It's like the Swiss Army knife of finance and accounting. From whipping up quick budgets to crafting complex financial models, Excel has got you covered. It's that friend who's always reliable, no matter how simple or complicated the task.

  • QuickBooks: It's the go-to for small and medium-sized businesses. Need to handle invoices, manage your expenses, or sort out payroll? QuickBooks makes these tasks feel like a breeze. It's like having a personal financial assistant that keeps everything neat and tidy.

Fostering Communication: Marching to the Same Beat

Interviewer: Communication is key in any successful team. How do you encourage and enable good communication within your finance team?

Makayla: I’ve found that communication's a breeze when you keep things open and transparent. We have regular check-ins to see how everyone's feeling about our financial journey. It keeps us all on the same page, marching to the beat of our shared financial drum.

Monitoring Progress: KPIs and Dashboards—The Lorax's Watchful Eyes

Interviewer: Speaking of ‘check-ins’, monitoring progress is crucial. How do you track your firm's performance?

Makayla: Have you ever heard of the Lorax?

Interviewer: Let me guess, another Dr. Seuss reference?

Makayla: Yes (smiling). It's a story about this creature that guards special trees called Truffula trees, which are important for the environment. Well, in our case, we have KPIs and financial dashboards. These are like the Lorax's watchful eyes. They help us keep an eye on everything, just like the Lorax does with the trees. That way, if we see any problems pop up, we can jump in and fix them before things get out of hand.

Interviewer: Could you break down what you mean by KPI’s and dashboards?

Makayla: Absolutely! KPIs is an acronym for ‘Key Performance Indicators’. These are the ‘things’ / metrics we use to measure the success of our business objectives. They're like our compass, guiding us towards our goals. As for dashboards, think of them as our control center—big screens that show us all the important information about our work in one place. They're visual representations of our KPIs, displaying real-time data and trends that allow us to make informed decisions on the fly. 

Essentially, KPIs tell us where we want to go, and dashboards help us navigate the journey.

Interviewer: Could you share some examples of KPI’s that you use?

Makayla: Absolutely!

  • Monthly Sales Growth: We track the percentage increase or decrease in our monthly sales compared to the previous month. This simple KPI gives us a quick snapshot of the firm's sales performance over time.

  • Customer Satisfaction Score (CSAT): We have a short survey after each customer interaction to gather feedback on satisfaction. We use a simple 1-5 rating scale which allows us to easily measure and monitor customer satisfaction levels.

  • Website and Social Media Traffic: We track the number of visitors to the firm's website and social media pages weekly. Monitoring this traffic gives us insight into how effective our online marketing efforts and overall brand visibility are.

Evaluating Accountant Relationships: Spotting Red Flags

Interviewer: And finally, evaluating the accountant relationship. How do you know when it's time to shake things up?

Makayla: This can be a tough one, but like any other relationship, it takes intentionality from both parties to keep things healthy. From my end I keep my eyes peeled for any signs of trouble. Here are some things I’ve learned to look out for over time:

  • Communication and Responsiveness: If your accountant is consistently unresponsive or fails to keep you updated on your financial matters, it could be a sign that they're not prioritizing your needs. For me, effective communication from and with my accountant is crucial.

  • Accuracy and Expertise: Everyone makes mistakes, so finding mistakes isn’t the main problem. The problem is when the mistakes are continuous. That for me, is a red flag and could indicate incompetence, carelessness or perhaps a lack of expertise in handling our specific financial situation which could mean it’s time for a change.

  • Value for Fees Paid: Assess whether you're receiving sufficient value for the fees you're paying. If you feel like you're not getting the level of service, attention, or proactive advice that justifies the fees, I think that would indicate that it’s time to explore other options and find an accountant who offers better value for your money.

Interviewer: Thank you, Makayla, for sharing your wisdom on managing the finances of your law firm. Your approach is truly inspiring.

Makayla: It's my pleasure. Thanks for having me!

Closing Thoughts:

With her proactive and insightful approach to financial management, Makayla exemplifies the blend of professionalism and passion that defines her leadership style. Her commitment to evaluating, streamlining, communicating, monitoring, and adapting ensures that her firm remains at the forefront of legal excellence.

We hope that Makayla's interview offers valuable insights to you as a law firm professional, when it comes to how you stay on top of your business numbers, empowering you to navigate the complex landscape of financial management with confidence and proficiency.

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