It is always a bit of a challenge submitting articles weeks ahead of their scheduled publication. They can sometimes feel slightly out of date, and this has been without doubt my toughest assignment so far given the events currently taking place around us. I ask you to please bear with me as things will undoubtedly have moved on since submitting this piece. I do not expect any recognition for meeting my deadline. The real heroes, of course, are all of those working in the NHS, care homes and for other vital services who have made the ultimate sacrifice on our behalf, and for which I will always be grateful.
For myself, I followed government guidelines and stayed at home and started to see what I could do to help the law firms that rely on Financial Eye for COFA support and general business advice. Fortunately, I was already well acquainted with Zoom and Teams having been an early adopter of all free tech-stuff. Many of my clients, on the other hand, were struggling to get to grips with this modern technology. However, we persevered and soon we were all Zooming along like mad!
It is worth noting that most Financial Eye clients are not huge. In fact, the average number of employees per firm totals around 15 staff, including fee earners. Most of them operate out of one office; our largest client has five offices. They all tend to be well organised even if some of their technology is a bit outdated. We know all this because we have worked with most of them for many years, and these are the kinds of things that are discussed at our quarterly compliance meetings. We are also familiar with the accounts packages they operate and the kind of reports they can run. Some of our firms operate almost entirely virtually and store all their documentation within their accounting system. This meant that we were able to access their systems and review their files, including matter ledgers, payment authorisation forms, copy bills, residual balances reports, client care letters, registers of breaches, non-standard undertakings, and charitable donations ledgers, remotely. In fact, we were able to access everything we needed to carry out and document our quarterly reviews, including an updated financial risk register and a control framework (or “to do” list, as I like to call it).
While I am on the subject of “to do” lists, I just need to mention my favourite subject – residual balances. Lockdown has given us all a bit more time to address this issue with our firms before the SRA and the reporting accountants begin taking an interest. One obvious benefit of completing this exercise has been compliance with the Accounts Rules, which is always good. But, we have also been able to identity balances which have been billed but not yet transferred to office, or more simply put, cash. This exercise has been a revelation to some of our clients and a very good source of much needed cash.
And that’s because cash really is king! From a compliance perspective, our firms were all generally in good shape, and we were able to confirm this to them. But from a cash perspective, this was not always true. Many of our firms operate with overdrafts and bank loans. Despite being nagged by us for many years to put together meaningful cash-flow forecasts, many of them could not see the point. That is until the lockdown.
During the first month of lockdown, we assisted many clients with their CBILS applications. After four weeks, the loans and grants we helped them apply for, and eventually receive, totalled over £3m. Without this money, many of these companies might not have made it. If there was ever a time to adopt and persist with a cash-flow forecast, the time is now. It has allowed our clients to address issues and make decisions they had been putting off, some of which were uncomfortable but vital if their business was to survive. As a manager, you really need to know how financially viable your business is. How can you make that judgement without a cash-flow forecast? And do not forget, the SRA expect you to contact them immediately if you have any concerns regarding financial viability.
I really hope that by the time you are reading this your back to work strategy is well underway; for many firms this started in May. Most of the firms we work with are quite understandably revisiting their future office requirements and investigating how they can move to a more paperless office. Interestingly, the biggest barrier is not that they lack the technology to do this, it is more that they do not feel comfortable working without a paper file. I have some sympathy with this, but ultimately, as we have just witnessed, having the ability to work from home on a laptop is invaluable. My only problem with this concerns the human aspect. Without a doubt, the biggest joy of working for Financial Eye is travelling around the country (living the Eye life!) and visiting our clients in their offices to help them run their businesses. The personal interaction we have with them is the highlight of the visit, and I hate to say it, but Zoom just does not quite cut it. On the plus side, it has forced us to rethink how we will work with firms going forward. We are already redesigning our processes so that we can spend more time interacting with our clients remotely and less time in their offices. In the words of a certain Fat Larry, “Oh Zoom you chased the day away”!
Director – Financial Eye