How Growing Your Financial Intelligence Can Help Boost Your Law Firm’s Profitability
There are various benefits associated with boosting your law firm’s profitability. After all, it provides you with the opportunity to invest more heavily in the future of your business, whether it’s through purchasing time-saving technology or upgrading your attorney compensation plans.
More often than not, enhanced profitability is closely tied to financial intelligence. That is, understanding the specifics of your financial landscape so that you’re able to make smarter financial decisions in all areas related to your business, from tax planning to employee payroll.
What are the benefits of growing your financial intelligence?
There are many benefits associated with improved financial intelligence, such as:
- Better decision-making.
Perhaps the biggest asset associated with becoming more financially aware is that it enables you to make better decisions on behalf of your firm. After all, “financial intelligence equips managers to make sense of various ratio analyses, return on investment, etc. The new understanding helps them make informed and calculated decisions”. For example, if you notice an issue with cash flow within your law firm, you can implement new practices to resolve this issue.
- Improved client satisfaction rates.
As mentioned above, when you are financially intelligent, you are less likely to make mistakes that could cost time and money for both your firm and your clients. This is particularly important when you consider that a study reported that “the big commercial law firms are not delivering value for money and often fail to stick to budgets”. As such, working to become more financially intelligent can boost client satisfaction, while also improving your firm’s reputation.
How can I grow my financial intelligence?
Thankfully, there are various steps you can take to grow your financial intelligence. For example, you could:
- Identify employee and staff’s skillsets.
According to The Balance Small Business, in identifying employee strong suits, employers can “make smarter decisions about assignments, deliver more effective performance reviews and ensure that every employee can grow and succeed.” This can offer many financial rewards. Firstly, it improves employee retention as your team members are assigned tasks that they enjoy. It also improves efficiency, as they are able to work on tasks that fall within their skillsets – meaning, they can complete them to a high standard and within an agreed timeframe.
- Get to grips with your financial data.
The world of law firm financing is constantly changing, with a recent study finding that 43% of responders have found that “their jobs have changed beyond the traditional remit of law firm financial leaders”. As a result, this can lead to numerous costly misadventures if a real effort is not made to get to grips with financial data. You can kickstart this process by learning which KPIs your firm should be tracking and then implement systems to measure your success.
- Keep an eye on innovation.
The law firms that are most primed for success are those that have their finger on the button when it comes to innovation, especially when it comes to tapping into technology within their practices. For example, legal accounting software can help you track and assess your finances with great detail and accuracy than more traditional DIY accounting methodologies.
- Keep learning.
Another way in which you can grow your financial intelligence is by being open to learning and training opportunities. For example, you could. Alternatively, you could read books such as Brooke Lively’s “From Panic to Profit: How 6 Key Numbers Can Make a 6 Figure Difference in Your Business.”
Want to unlock your true potential through financial intelligence? FinOp Group can help!
At FinOp Group, our team of experienced CPAs provides full-service law firm accounting solutions, including tax planning, payroll, budgeting, and billing. This means that you can focus on what truly matters, running a stellar law firm. Schedule your free consultation today!