The nineteenth version of the Handbook was published on 1 October 2017 (no changes to the SRA’s Accounts Rules).
This article is based on one originally written for the ILFM and was published in its original format in the January/February 2017 issue of the ILFM’s bi-monthly members magazine Legal Abacus. At the time of publishing, I was one of the presenters of the ILFM’s COFA seminars and the sole presenter of the ILFM’s Credit Management workshop.
One of the reasons that I first became involved with the ILFM was my passion for sharing legal finance knowledge and best practice. Joining the ILFM’s Executive Council in led to me join the ILFM’s prestigious body of seminar presenters and tutors, giving me a different platform to be able to meet and engage with other legal finance professionals. When presenting a course, my main objective is to ensure that every delegate leaves a course I’ve delivered with some fresh ideas and solutions to take back to their office.
The true test of course of my success in achieving that objective is to follow up with delegates several months later. Here is some feedback from two delegates that attended the ILFM’s Credit Management course that I presented in June 2016……….
Matthew works for a SME firm with several offices and over 150 staff:
“We have had a meeting to discuss a lot of the points that were raised at the training day. The thing we’re most keen on implementing is the centralisation of the billing system and having accounts send out all the bills for all the excellent reasons that you outlined on the day. The partners are supportive but we all recognise that this does represent a shift in the culture of the firm and as you made very clear, it is important that people have time to adjust to the change. We’re looking to trial it with the family department as they’re fairly forward thinking and more receptive to change.
I’m also currently working on a new credit control mandate for our firm’s policy folder/ intranet, as our current policy is very flexible. We’ve already updated our bills to automatically show the payment due date on the bottom of the bill and we’re looking at reducing our standard payment terms. We’re moving in the right direction, but as you said on the day it’s a two to three year project so it’s about keeping the momentum going to be able to realise the ultimate aim of getting debtor days down and putting cash in the bank.”
John works for a SME firm with several branch offices and circa 50 staff:
“Our challenge in my view is to improve the commerciality of our approach to collecting debts and also to bring our WIP days down.
I took away some great ideas from the course and within a month had put a plan together for our partners to consider proposing that we move away from relying solely on written chasers to include a telephone call early on in the chasing cycle to ensure that the bill has been received and to open communication with the client with regards payment. I’ve also proposed that our chasing cycle is contained to 60 days – after which we look to consider issuing court proceedings for recovery. As you said on the day, anyone who hasn’t paid or made contact after receiving two contacts chasing for payment either hasn’t received the chasers or doesn’t want to pay!
Nevertheless we do have quite low debtor days so for me our biggest challenge in releasing cash is in billing WIP in a timely way. To move forward on this, I’ve also written a credit management policy with regards the expected timescales for billing of WIP across the firm. This outlines specific trigger points such as billing on a will file at the point of obtaining signatures with a view to recovering payment at signature. The biggest change though is to recommend we interim bill at least once every 60 days especially on on-going matters unless there are compelling reasons that a bill shouldn’t be raised such as on a family law matter where payment will be made when the financial settlement is finalised.
In many ways financially speaking we’re only taking baby steps but culturally these changes represent quite a significant shift so as you said it might be slow going but the key is to keep moving forward.”
If these delegates experiences inspire you to see opportunity for change, I’d be delighted to discuss the most effective way to help you deliver change in your business.
Recently the BBC have reported that according to latest office figures, the UK’s population has increased by nearly half a million last year (http://www.bbc.co.uk/news/uk-33266792). Just over half of the growth was accounted for by natural change i.e. there were 212,100 more births than deaths.
That’s a lot of women taking maternity leave! And I wonder if many SME employees are aware of the legislation around awarding pay awards during maternity leave and the implications of the now ten year old judgement in Alabaster v The Woolwich plc. …
In May 2014, the SRA published their updated Policy Statement on their approach to regulation and its reform. In that statement, the penultimate point (if you got that far!) notes that the then open “consultation paper on changes to the requirements for accountants’ reports on client accounts, is an initial stage in what will be a more significant piece of work in relation to the holding of client money. This will include consideration of the current SRA Accounts Rules with the aim of reducing length and complexity and a consideration of alternatives to the holding of client money and consideration of the risks and incentives related to the holding of such money.” read more
There are three groups of changes in Version 14 (with no changes to the SRA’s Accounts Rules):