Money Makes the Firm Go Round
Easy Money?
Even Non-financial Experts Effectively Manage a Firm’s Finances – If They Know What to Watch
By Jay Strother
Is there a moment each month when, reviewing the latest financial statements from your accounting department, the numbers, the terms, and the dollar signs converge and you think, “What does all this mean?” Or, if you understand what you see, can you explain it to your non-accounting staff members (or to partners and associates whose talents are not necessarily in finance and accounting)? Understanding – and driving – where the money comes from, where it goes and how your firm monitors, reports and plans finances is crucial for executive directors and administrators. However, even a legal management professional with an accounting background may not be fluent in the nuances of accounting and finance as it pertains to your firm. While law firms are businesses, the inherent financial concepts taught in financial management and accounting courses may not prepare you for the reality in the firm. “There’s such a big difference in accounting and financial management between other businesses and consulting organizations like law firms,” said Joseph Grasso, associate dean for Finance, Administration and Corporate Relations at Cornell University’s ILR School. He cites client trusts, firms’ debt needs/philosophy and no traditional “inventory” as areas that vary from the norm. How can administrators ensure they watch the right metrics and shape the correct accounting and financial approach? There are some basic hotspots and insightful areas most effective financial managers and legal administrators monitor – even if their backgrounds include little formal training.
“I was an English education major in college,” said Paul Morton, an ALA member and executive director at Burns & Levinson in Boston. “I took accounting after college and dropped it – boring! I took macro and micro economics. Everything else I learned on the job or at conferences
Even Non-financial Experts Effectively Manage a Firm’s Finances – If They Know What to Watch
By Jay Strother
Is there a moment each month when, reviewing the latest financial statements from your accounting department, the numbers, the terms, and the dollar signs converge and you think, “What does all this mean?” Or, if you understand what you see, can you explain it to your non-accounting staff members (or to partners and associates whose talents are not necessarily in finance and accounting)? Understanding – and driving – where the money comes from, where it goes and how your firm monitors, reports and plans finances is crucial for executive directors and administrators. However, even a legal management professional with an accounting background may not be fluent in the nuances of accounting and finance as it pertains to your firm. While law firms are businesses, the inherent financial concepts taught in financial management and accounting courses may not prepare you for the reality in the firm. “There’s such a big difference in accounting and financial management between other businesses and consulting organizations like law firms,” said Joseph Grasso, associate dean for Finance, Administration and Corporate Relations at Cornell University’s ILR School. He cites client trusts, firms’ debt needs/philosophy and no traditional “inventory” as areas that vary from the norm. How can administrators ensure they watch the right metrics and shape the correct accounting and financial approach? There are some basic hotspots and insightful areas most effective financial managers and legal administrators monitor – even if their backgrounds include little formal training.
“I was an English education major in college,” said Paul Morton, an ALA member and executive director at Burns & Levinson in Boston. “I took accounting after college and dropped it – boring! I took macro and micro economics. Everything else I learned on the job or at conferences