A client had a range of very skilled fee earners delivering top quality work to their clients. However, while their reputation was growing and fee income was rising, the firm itself was finding cash and lock-up increasingly tough to manage.
On an intellectual level all fee earners fully appreciated working capital, lock up, the need to chase debts and bill WIP. A few even understood value billing. However, in practice, people were more focused on projects and matters than raising fee notes, chasing debts, or thinking about how to position the work in terms of its value rather than hours worked.
The client discovered that working with a margin of only 16% available for partners meant that they were running an overdraft amounting to millions of pounds that was not aligned to the brand the firm presented externally, nor did it reflect the financial hygiene that the finance director aspired to manage.
Each firm we help transform is different, but this clients challenges were similar so we focused on four key issues:
We spent time with the Finance Director and a number of the Heads of Department before establishing a solution that combined business consulting with financial education and coaching to drive behavioural change.
All fee earners over 3 years post qualified went through a 3 month process:
Performance improved across all departments specifically in respect of negotiation and invoicing patterns. Fee earners reported changing the way clients viewed standing orders and payments on account and many admitted to discussing payment terms after negotiating fees. Work in progress fell by 23%, debtors fell by 18% and cash flow improved.
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