Today's article is guest written by Alex Holt of the Cashroom Ltd.
In this article The Cashroom provide an insight into why law firms should consider outsourcing its finance function. The Cashroom provide compliant, cost effective outsourced finance functions to law firms throughout the UK. Founded in 2008 The Cashroom provide remote services to nearly 200 law firms of all shapes and sizes.
There a four main areas in which law firms can benefit from outsourcing their finance function – efficiency, risk, compliance, and resilience.
- There should be cost savings both as a primary comparison against salaries, but also many hidden savings. No need for partners without the necessary specialist knowledge to monitor and supervise that area of the firm, Savings on tech spend, and freeing up office space for fee earning staff, rather than admin staff, makes good financial sense.
- A good outsourcer will help you redesign and improve your processes, making optimal use of your practice management system. The real-time accurate handling of postings and transfers should ensure accurate and up to date Management Information.
- The finance function of a law firm lies at the centre of the most fundamental risks faced by the sector. Cyber threat. Internal fraud. Human error. All these can spell huge financial losses, and significant reputational damage.
- A good quality outsourcer will have processes in place and certifications to counter cyber threats. They will have robust recruitment and supervision procedures to minimise internal fraud and error risks. These processes will be augmented by the use of cutting edge technology, such as secure communication portals and training routines to ensure all staff are constantly updated on threats. Use of automation and task management tools will also minimise errors.
- Such factors have led insurers to view a top quality outsourced finance functions as a better solution than inhouse equivalents, and they will reflect that view in the PII premiums quoted to firms who outsource.
- Outsourcers should have access to a broader staff base with many years of expertise to call upon. They should have processes in place to ensure their service remains up to date with any regulatory changes.
- That will apply to rules that relate not only to the legal sector but beyond- for example on data protection and anti-money laundering regulations GDPR Their service can support law firms in achieving compliance, providing the COLP and COFA with guidance and certainty of service.
- The outsource should provide evidence of compliance and training in support of document processes.
- As the country went into lockdown, many firms were not prepared to have their fee earners working from home securely and efficiently, let alone their cashiers. Outsourced cashiering provides an already remote service which should integrate seamlessly with the firm's own processes and procedures, often bringing improvements in speed and responsiveness.
- Resilience through remote working requires more than simply sending a cashier home with a laptop. That would cause significant security risks. A competent outsourcer will have a secure and robust process in place to ensure security while remote working.
- An outsourcer should also have a sizeable resource base, which means a firm need no longer worry about sickness or holiday cover. Similarly, that resource should be capable of flexing to support spikes of activity, something which an inhouse 'fixed' resource cannot do.
This is not an exhaustive list of the benefits of outsourcing a law firm's finance function, but should hopefully provide a few pointers and enable appropriate due diligence when having discussions with an outsourcer.
Alex Holt is Business Development Director for The Cashroom- the leading independent provider of outsourced finance functions for the legal sector. For a confidential, no obligation chat about how they might help your firm, email firstname.lastname@example.org