Posted on April 6, 2009
Surviving Tough Economic Times – 8 Financial Tips
Tougher economic times call for strategies tailored for new realities. Read the tips below to insure access to credit, protect short-term cash flow, and safeguard your firm’s financial future.
- Current lines of credit are in danger or are quickly drying up in many institutions. Banks want to see clear plans for cash flow, collections management and even marketing. They put customers to the four C’s test: character, capacity to repay, collateral, and care or maintenance habits. In addition they want customers to maintain a high credit rating.
- Widen your relationship with your bankers. Have a relationship not only with your loan officer but also a senior manager or a vice-president at your bank. This helps if the bank is involved in a merger situation and your contact is downsized. Note: There’s an opportunity in being associated with banks that are acquiring other banks. You may have an expanded client list if bankers are referral sources for your practice.
- The faster clients pay you, the more money you make with the same resources. Review your receivables weekly or even daily to quickly catch clients who are not paying – don’t wait 30 days. Be sure to do a financial status review at each of your case status review meetings and stop work on unfunded matters.
- Write-downs are one of a law firm’s largest invisible expenses. According to an Altman Weil 2007 Survey of Law Firm Economics, firms of all sizes lose an incredible $47,000.00 per attorney per year in write-downs. When delegating work to associates give clear direction and time limits to reduce the chance of write-downs due to inexperience. When partner-level attorneys take on matters, they should also give themselves perimeters to avoid future write-downs. In-house billing seminars are advised to keep everyone on top of this invisible reduction in realization.
- Look at areas to reduce spending. Try to figure out how to have meetings without travel by using online web meeting services and consider moving some of your staff or storage to less expensive locations.
- Be sure you have cash reserves on hand for the next 60 to 90 days.
- Ask your bankers the status of your credit availability. Are you in compliance? Will the bank renew your line of credit with similar amounts, rates, and terms? If not, what will it take to qualify?
- Recognize that banks monitor average daily balances when analyzing loan requests. Strive to keep a high average balance if you wish to qualify.
Sorry, the comment form is closed at this time.