How legal firms can leverage outsourced accounting for growth
With a variety of clients and strict compliance requirements, law firms may have more complex accounting requirements than other businesses.
In particular, new and growing firms may struggle to meet the cost and time requirements of onboarding in-house accounting specialists.
In this article, we’ll take a look at how law firms can leverage the power of outsourced accounting to achieve the financial and operational health necessary for growth.
Looking to the future
To achieve growth, law firms need to be able to spend as much time as possible on fee-earning, client-facing activities to build their reputation and raise capital to reinvest in the practice.
These are the most significant ways that law firms can leverage outsourced accounting services to achieve growth.
- Time to focus on core services – outsourcing accounting tasks allows law firms to redirect their focus and resources towards their primary legal services. This reallocation leads to improved client service, legal expertise, and overall firm efficiency.
- Reduced overhead – by outsourcing accounting tasks, law firms can significantly reduce costs associated with maintaining an in-house accounting department. This includes savings on salaries, benefits, training, accounting software, and office space. Outsourcing can thus be a more cost-effective solution, especially for smaller firms.
- Specialist expertise – particularly with the rise of remote working, you can source an accounting firm that specialises in working with law firms. These service providers are well-versed in the specific accounting and financial requirements of law firms, including compliance with regulatory bodies, trust accounting, and tax planning.
- Flexibility – depending on your contract, you may be able to engage more or fewer services for your accounting depending on your needs at that time, saving on labour costs.
- Enhanced financial reporting – professional accounting firms offer comprehensive financial reporting, ensuring law firms have accurate and timely financial information. This can aid in better decision-making, strategic planning, and provide clearer insights into the firm’s financial health.
- Embracing new technologies – many accounting firms now embrace cloud technology, which can provide up-to-the-minute reporting and deeper insights into your firm’s financial health.
- Risk mitigation and compliance assurance – accounting for law firms entails strict compliance with regulations, including those related to client funds and trust accounts. Outsourced accountants are equipped to ensure that firms comply with these regulations, reducing the risk of errors and legal liabilities. Their expertise helps in navigating complex tax laws and financial regulations, ensuring the firm remains compliant and minimises risks of financial discrepancies.
Finding the right partner
You should take your time to find the right accountancy firm for you.
Make sure to identify your key needs and any needs you may have in the future and ensure that your accountant can handle these.
Key elements that your firm’s accountant will need to be able to manage include:
- Tax and audits
- Client invoicing
- Financial transparency and compliance
Understand your own priorities and be able to communicate these clearly before beginning the process of finding an outsourced accountant. This will put you in a stronger position to start identifying firms you may want to work with.
What you need to know
In-house accounting may seem a straightforward approach and may be cost-effective for larger firms.
However, small and medium-sized law firms typically find that the flexibility and scalability of outsourced accounting offers a solution that adapts to their specific needs and those of their clients.
From invoicing to payroll, a specialist accounting firm will be able to support your firm through periods of growth, achieving the financial health necessary to succeed long term.
To learn more about how outsourcing your accounting could benefit your firm, please contact our team today.