Fractional CFO Services for Law Firms

Lawyers place a lot of time and money into starting a law firm. You establish a business plan, financing, office leasing, and client marketing. However, your next move in expanding your operations can become murky. What are your goals, whether bringing in more partners or increasing revenue? Will you open up additional offices in other locations? Establishing a revenue growth or expansion plan can be difficult if you are unsure about the current financial health of operations. Even with a plan, taking that next step becomes time-consuming when you still have to please clients. Hiring a law firm CFO can help.

A fractional CFO offers bookkeeping, records management, and financial analysis. They can help analyze your finances to provide the appropriate guidance based on your specific goals. At Firmly Profits, we offer monthly bookkeeping, bookkeeping cleanup, and fractional CFO packages. Chat with our CFO about our services to bring your business to the next level.

What is a Fractional CFO for Law Firms?

A chief financial officer (CFO) manages the entire financial operations of your law firm. They are typically hired full-term.

A fractional CFO has the knowledge and experience of a CFO, yet they work part-time or provide outsourced solutions. They may focus on a single type of financial solution, such as monthly bookkeeping or financial strategies, or provide packaged solutions depending on the law firm’s needs. You may hire a fractional CFO to provide short-term work or keep them on for the long term to be a financial advisor.

A fractional law firm CFO usually charges lower prices for their services than a CFO. They also inform you about any legal industry changes that may impact your financial statements.

What Are the Key Responsibilities of a CFO in a Law Firm?

A CFO’s main role in the legal sector focuses strictly on the firm’s financial aspect. This aspect would entail profit analysis, forecasting, and revenue. Throughout the years, this job role has evolved quickly for law firms. The adoption of technological advances has allowed for a law firm CFO to also take on a strategic role instead of an operational one.

The CFO now provides risk management and optimizes internal processes to increase operational efficiency. They will oversee the budget, track cash flows, and decide on future financial strategies for capital investments. They become a financial managing partner who oversees the entire financial scope of your law firm.

A fractional CFO provides a wide range of professional services based on their knowledge and experience, including:

• Developing and implementing financial plans to achieve strategic goals
• Managing budgets, forecasts, and compliance work
• Providing leadership and consulting on the firm’s financial matters
• Maintaining the law firm’s relationships with external lenders, vendor partners, and advisors
• Monitoring and tracking financial performance
• Providing recommendations to help maximize profits
• Managing and supporting the firm’s marketing and advertising budgeting strategies

Budgeting and Cash Flow

A fractional CFO evaluates your current budget along with your cash flow, assets, expenses, revenue, and liabilities. They can provide forecasting and generate reports. This role helps business owners to determine if they are reaching milestones or having problems with their cash flow. A CFO provides clarity on where the money is going so you can fix issues and make operations run smoothly.

Strategic Planning

Another role for a law firm CFO involves providing strategic planning. Whether you want to expand, make investments, or boost revenue, the CFO gathers the necessary financial statements, so you have a broad picture of the law firm’s current financial health. Then, they provide advice on how to move forward to reach the desired goals.

Managing Growth

Managing growth becomes important as you don’t want the law firm to grow too quickly beyond your financial means. The CFO sees to it that growth happens at a manageable pace based on your present revenue.

Should Your First Law Firm CFO Be Fractional?

A fractional CFO can better manage your time and budget if you are just starting with your small law firm. Since they aren’t on the daily payroll, you can hire them when needed. You may periodically have the CFO review your bookkeeping to perform a diagnostic and clean-up of the books. They can also provide financial guidance and strategic planning for those early operational stages.

Bigger firms also take advantage of a fractional CFO when it comes time to expand or when they need extra help with records management. A law firm CFO provides consultation on how to make the next big step toward expansion and sustainability. They provide financial reporting and may also spot errors missed by the previous bookkeeper.

When to Use a Fractional CFO?

A fractional CFO can assist your law firm at any operational stage. You may want a fractional CFO when you don’t have anyone experienced in the firm who can handle the bookkeeping and financial management tasks.

If you are overseeing the office managerial operations but also have a lot of client cases pending, hiring a fractional CFO can take the financial workload off of your shoulders. You may also have a full-time CFO who is leaving the firm and will need a fractional CFO to temporarily step into the back-office role until a new CFO is hired and trained.

The Benefits of Using a Fractional CFO

With a fractional CFO, you are gaining a high-level financial advisor the moment they enter your law firm. They are ready to provide the required services immediately.

In addition, fractional CFO services are available based on your time frame. If you only need someone to balance the books or provide strategic planning, the fractional CFO comes in at your request. Since they aren’t on the daily payroll, this aspect allows you to reap the cost savings versus using a day-to-day salaried CFO professional.

Lastly, the fractional CFO provides impartial advice. They don’t feel pressured to sugarcoat the actual financial numbers to gain a promotion in the law firm or to please the managers. With this unbiased outlook regarding the law firm’s financial health, you can make better decisions that will benefit your operations.

Take Your Business to the Next Level

Finding a financial bookkeeper who provides cost savings, flexibility, and sound advice regarding your law firm’s finances is attainable. A fractional CFO understands the business of law and offers a wealth of services geared toward helping you with the financial aspect of your operations.

Here at Firmly Profits, we provide fractional CFO work for law firms across the United States. Learn more about our financial solutions by filling out our contact form or by calling us at 941-202-4062.