Your law firm doesn’t need a client account!

My Legal Cashier

You may need a rethink if the sole reason for operating a client account is because you receive monies from clients towards unbilled fees or unpaid disbursements. Solicitors Regulation Authority doesn’t require you to hold this money in the client account if your firm has incurred the disbursements and you are liable to pay them. It would be best to inform your clients how and where this money will be held, which can be covered in your client care letter. We recommend that clients open a separate reserve account for this, which is not a client account, reducing the administrative burden and costs that come with a client account. This means you are not required to reconcile client accounts once every five weeks or worry about signing off the bank reconciliations at month end or worrying about client balances going overdrawn.

This stance from SRA helps law firms spend less on administrative workload and more on providing quality service to their clients. Contact us today at 020 3598 4327 or email us at ‘[email protected]’ for a smooth transition away from a client account so you can spend more time serving your clients. We ensure you take all the steps required by SRA to get this right!

Muhammad Zameer
(FCCA, Legal Accounts Expert)
My Legal Cashier Ltd

Secure the cash your law firm needs

Covid-19 and cash flow

Secure the cash your law firm needs!

  • Covid-19 is going to affect your cash inflow so it’s essential you pull out that cash flow spreadsheet and work out how if you will have enough cash to keep your business going for the next 6-12 months. If the answer is ‘No’, then it’s time you act now and secure the cash you need before it’s too late.
  • Consumers are staying home and not spending. Discretionary spending appears to have collapsed in recent days.
  • SMEs are finding cash to stay afloat and meet their fixed overheads so no extra spending from this sector
  • Bank of England reduced interest rate to 0.1% to cut cost of borrowing but there is a limit to what this can do as Covid-19 affects both sides of the economy: supply and demand. The supply of goods and services is impaired because factories and offices are shut and output falls as a result. But demand also falls because consumers stay at home and stop spending, and businesses mothball investment.

How to arrange cash

  1. Speak to friends and family and make use of that extra cash sitting in their bank account.
  2. Try to speak to your regular suppliers and ask for 3-6 months of payment holidays. This gives you interest free credit.
  3. Contact HMRC on 0800 0159 559 and request time to pay taxes already due or becoming due soon. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. However, it’s highly likely that these arrangements will offer interest free credit.
  4. If your business pays no or little business rates because of small business rate relief (SBBR), you might be eligible for £10k cash grant from your local authority. If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority. You do not need to apply. Funding for the scheme will be provided to local authorities by government in early April.
  5. Most of the small businesses will finally resort to Coronavirus Business Interruption Loan Scheme (CBILS) to keep the business going. These loans/overdrafts are provided by the British Business Bank through banks with no interest for the first six months. Finance terms are from three months to 10 years.

TO BE ELIGIBLE FOR SUPPORT VIA CBILS, THE SMALL BUSINESS MUST:

  • Be UK based, with turnover of no more than £41 million per annum
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – click here
  • Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
  • Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements
  • Full eligibility criteria will be published by the Government shortly

 

If you have exhausted all the possible options and are planning to approach banks for a loan, then please ensure that you have a sound borrowing proposal as it is one of the key eligibility criteria. Please do not hesitate to contact My Legal Cashier if you need any assistance in preparing your borrowing proposal. We will assist you in preparing cash flow forecasts to work out how much cash is required over the next 12 months to keep your business going and approach banks with a sound borrowing proposal to secure the cash you need.

Remember, these loans are backed up by 80% Government guarantee, so you don’t need personal security to secure these loans, however you do need a sound borrowing proposal.

Please contact My Legal Cashier on 020 3598 4327 for further advice.