Julie and I were working together to develop a comprehensive accounts receivable aging process for her firm and when we finally got to the end of the project and were ready to pull the trigger, she started to hesitate. We were on a video meeting so I could see her sit back in her chair and rest her hand over her chin. I could tell her wheels were spinning. “I can’t believe I have to do this, why won’t my clients just take me seriously and pay on time”? “Julie”, I paused. “People will take paying your invoices seriously when you take getting your invoices paid seriously”. The hard truth is, your clients need to see that you expect them to follow through with compensating you for the valuable services you have taken the time to carry out for them.
Time and money are so interchangeable these days. We started exchanging time for money at our first few jobs where we clocked in to start getting paid and when we clocked out, the money stopped. Now that you own a law practice you have access to this new way to view time as it relates to money because you now have residual power. Residual money is not money you clock in and out for, it’s the money you receive because you have created a service supported by systems and aided by people (that are not you) that removes your money’s dependency on your hours. But the quest to discovering your residual money formula is more complex than just clocking in and out. Learn more.
Getting real with your numbers can be a difficult journey. What you think is going on financially in your firm can come into question very quickly once you crunch the numbers and they’re staring you in the face. We love the numbers because they don’t lie. There is no opinion and no bias, if the numbers don’t add up they simply don’t add up. The first step to understanding your firms’ profit is to figure out where it’s coming from.
When you look at your financials you should quickly see the picture they paint of your legal business’s performance. Your financials should serve as a confirmation of your financial positioning, a tool in which to measure your goal progression, and a compass guiding you into your financial future. Do yours?
You want more time with your family and do the things you love doing (besides practicing law). You also wanted a plethora of funds to support this. It would make sense that you now monitor these two things, time and money, like a hawk to make sure you’re getting what you originally set out to get from all this, right? Nope, in fact many practice owners run from basic accounting requirements (if this is you, for the love of law please keep reading). So why are you running from the thing you set out to gain?