The Easiest Way to Boost
Billable Revenue and Cash Flow,
And Minimize Unbillable Costs!
Boosting revenues is the life blood of all law firms's and companies. To capture the financial result of the activity with as much accurate detail as possible as close to the time that activity is completed.
Regardless of their practice areas, law firms and companies share the same basic financial structure by lowering operational costs in terms of their billable and unbillable expenses. Every expense in time, personnel, rent, office supplies, etc. is either visible or hidden. These Incurred Expenses flow in to one of two critical categories...
- Expense that is chargeable to the client or company.
- Expense that is not chargeable to the client or company.
The easiest way to increase your revenue is to increase the amount of Incurred Expenses that can be charged back to clients and companies and to limit the number which is not chargeable will lower operational costs. It seems simple enough, but which expenses are the easiest to make chargeable?
Five Most Chargeable Expenses
- Telephone Expenses.
These five expenses won't surprise you, but these are the expenses that law firms and corporate law departments often fail to make chargeable to lower operational cost. Why would that be?
The Human Impediments
- Forgetfulness: Life in a law firms and companies is fast-paced and hectic. There are constant interruptions and deadlines to be met. How often do you forget to jot down a time entry or go to the copier, printer or fax machine and forgets to record the job on the ledger because they were in a hurry?
- Free Rider Syndrome: How often is a task not recorded or recorded as an administrative job because someone forgot the client and matter number and attorneys who believe that everyone else's clients need to be billed for expenses but their clients are special and should be exempt?
- Errors: People make mistakes! Recording incorrect information causes a lot of problems. It either takes someone's expensive time to figure out what the mistake was and how to fix it or it just doesn't get billed or it gets billed to the wrong matter and client. To lower operational cost, you need to overcome these errors, so your billing statements do not create questions about your billing practices.
The way to maximize the expenses that you can charge back to client and matter would be to: Capture the financial result of the activity with as much accurate detail as possible as close to the time that activity is completed as possible to lower operational costs.
This principle probably seems ridiculously obvious, but most law firms and companies fail to do this well on a daily basis. They will not account for many thousands of dollars in revenue every year because they do not embrace this concept and put systems in place to accomplish this goal. By tracking expenses with an automated cost accounting system can significantly boost profits and lower operational costs.
The Four Must-Have Components
When selecting the systems that you need to implement to quickly and accurately capture billable events look for these four components to lower operational cost:
- Automatic / Forced Capture: The system should either Automatic / Force Capture the task or forces the person to input the information before the task can be completed.
- Accurate Capture: The system should provide as much detail regarding a task as possible. The more correct information you have the easier it is to correctly manage those expenses.
- Timely Capture: The system needs to force the capture of this accurate detail at the time the task is being completed. The longer a task goes unrecorded the more likely that expense will become uncollectible. Time is critical!
- Unique Pricing: Enables you to track differently priced expenses concurrently, so you can print or copy documents for different matters any time with the assurance that the agreed price per copy is being recorded.
You can maximize revenue and lower operational costs by capturing these and other expenses and passing them on to your clients. The easiest way to accomplish this is by implementing systems that accurately capture the financial result of an activity as close as possible to the time it is completed. The answer is; Software Cost Accounting Systems that are customized and do not require a sizeable investment before you recoup expenses. Pay-for-usage software offers an alternative to hardware, and is a formidable competitor in the cost accounting system market.
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