In recent years we have seen a growth in enquiries from our clients and partners seeking assistance with their finance function. The challenge of finding and retaining experienced finance staff is a major factor in this, particularly in the legal sector where specific controls and reporting requirements are critical.
The other main trend concerns technology. There is an awareness that technology is developing quickly and that the rise of cloud software and artificial intelligence (AI) are changing how finance teams operate. With this there is trepidation as to how to navigate the abundance of finance software to find the best option and how to mitigate the rapid pace of change.
Regardless of the systems used, reporting remains a recurring challenge and a significant concern for many. The need to generate regular, timely financial information - both for internal management and external stakeholders - can be time consuming and complex, especially when pulling together data from a range of sources.
An external finance partner can function as an independent voice, offering advice on firms’ KPIs, the reporting structure to effectively monitor them, and assisting with budgets and forecasting.
6 benefits of outsourcing your law firm’s finance function
Professional expertise
Outsourcing to a full service accounts, audit and advisory firm affords access to experienced, qualified finance professionals and a broad range of specialist knowledge that can be called on as needed.
Effective financial controls
In any initial outsourcing conversation, the adequacy of the existing audit and financial controls should be considered and recommendations made on process and software changes for their improvement.
The latest technology
The proliferation of cloud software and AI continues to bring ever greater automation and efficiencies in finance. Working with an experienced finance partner with knowledge of the software market, ensures you are using the latest technology and systems that best fit your requirements.
Continuity of service
Finding and retaining quality finance staff with knowledge of your organisation and the specificities of the legal sector can be challenging. Outsourcing mitigates this risk, providing access to dedicated staff and a broader pool of finance specialists. Our data security procedures ensure uninterrupted access to our data and software.
Control costs and resources
Finance function requirements vary significantly across firms, whether by the volume or frequency of the bookkeeping, the level of expertise required or reliance on external advice. Outsourcing allows you to pay only for the hours you need at an appropriate level, whilst having the comfort of access to ad hoc advice.
Flexibility and scalability
As firms grow (or reduce) in size or complexity, resource requirements change. Outsourcing offers the flexibility to adapt at the pace you want, avoiding the rush to hire additional permanent staff or overhaul systems.
Is financial outsourcing right for your law firm and what might it look like?
Whilst full outsourcing may be the appropriate solution, each business case is unique, and it won’t always be the best option. Working with a finance partner with a flexible outsourcing team structure allows you to either offload your entire finance function or collaborate within your existing systems. Initial discussions should determine which tasks should be outsourced and which should stay in-house. The availability of suitably competent finance staff and how their time can most productively be spent in the business will shape these decisions and determine whether you require a complete finance team or specific individuals for particular roles.
It is possible that your existing in-house systems simply need improvement. Common examples of areas where efficiencies can be achieved include financial reporting, data processing or the payables approval process. An initial system review will identify software and process improvements and who is then best-placed to deliver financial tasks.
One of the challenges particular to law firms is the treatment of client monies and the operation of the client account. Many off-the shelf outsourcing solutions won’t have the functionality to deal with this adequately. Moreover, the need for timely, accurate movement of client funds is something that an external finance partner may struggle to deliver in a compliant manner.
There are a handful of outsourced finance providers who offer client account management in line with SRA requirements. For firms wanting to retain control of this element a hybrid outsourcing model may be more appropriate, whereby the operation of the client account remains in-house, whilst some or all of the rest of the finance tasks are taken on by the provider.
The key to successful outsourcing is choosing a partner who offers the flexibility to adapt to your requirements, whilst having the legal sector expertise to lead and shape the project to deliver high quality financial reporting and support to the firm’s management.
For more information about outsourced finance functions that could assist your firm, please get in touch. Call 0808 144 5575 or email help@armstrongwatson.co.uk.
