Determining how to balance outgoing costs to incoming billable hours is one of the biggest challenges faced by the Australian legal sector.

Often when outgoing costs rise the immediate response is to increase the hourly rate charged to clients.

Another option is to take a closer inspection of what those outgoing cots are and how to best manage them.

Significant operational bottom line benefits can be found with Spend Control and eProcurement:

• Obtain consistent ‘best value’ for goods and services
• Improved financial control and compliance with organisational policies
• Reduced cost of the procurement process
• Improved management visibility
• Increased organisation-wide productivity

Opportunities for Cash & Efficiency Savings

• Increase Purchasing Visibility

Law firms must be able to have full visibility in the method that procurement is undertaken, what goods and services are being obtained and from what suppliers. What is needed is a Spend Control solution to support the day-to-day purchasing process in a way that ensures compliance with organisational sourcing and authorisation rules, whilst offering full cost-pipeline visibility.

• Eliminate Maverick Spending

Many law firms would be familiar with invoices turning up unannounced to the Accounts Payable department, with the accounting staff then needing to chase down the originator, determine if it is an internal charge or disbursement, and code it accordingly. This type of maverick spending can be eliminated by implementing and automated purchase/cheque request process, with a workflow for approvals.

• Streamline & Automate Invoice Management

Relying on paper-based processes to handle inbound invoices drives up costs. With invoice management solutions, law firms can drive out cost from the bottom up. Invoices can be validated at the time of submission to minimise errors and re-work, by received via direct integration with back-end systems to eliminate most of the invoice handling and allow management to gain real-time visibility and control into the status of all invoices allowing them to optimise working capital.

• Eliminate Unnecessary Write-Offs

Nothing is more frustrating than writing off legitimate client expenses, yet many firms find themselves in this position. Lost, miscoded, or delayed disbursement invoices can miss the billing cycle and, therefore, the billing window. Spend management systems eliminate this problem by identifying reimbursable costs and the associated client matter before a purchase is made. When the invoice arrives, the disbursement coding is automatically pulled through to the invoice.

• Enable Quick & Easy Budget Checking

As legal engagements have become more project-based, budget tracking has grown in importance. Many  firms operate blindly against budgets until month-end close. Spend management systems can check budgets before expenditures are committed and before invoices arrive. This lets Partners know where they stand on an engagement at any time and prevents budget overages.

• Improve Cost Visibility by Employee & Client Matter

Closely related to budget checking is the notion of accountability. Many firms have difficulty attributing costs accurately to specific client matters or employees. By implementing a formal authorisation process, it becomes clear where expenses originate. Spend management systems also help by using coding mechanisms that ensure accounts are charged accurately and appropriately.

• Manage Disbursements

Law firms have significant costs tied up in disbursements; monies which they have to pay to third parties to help prepare for client cases e.g. court fees, stamp duty on property purchases, fees for medical or other expert reports.  In order to eliminate write-offs, this process is automated by Spend Control systems with disbursements booked to the correct client account and against the appropriate matter and including controlled authorisation workflow and security of sensitive client information.

• Reduce IT & Telecommunications Expenditure

IT is often the single largest spend area in law firms and requires close scrutiny. Too often IT expenses are buried in employee expense reports, hardware and software is purchased when similar items already exist elsewhere in the organisation, and there is limited visibility of potential assets. A Spend Control system enables the IT team to define standard IT configurations and ensure the correct suppliers are engaged and appropriate corporate standards are applied when employees make purchases.

• Leverage Aggregated Spend

In most law firms, purchasing is dispersed across the organisation and fragmented across numerous suppliers. A well deployed Spend Control system will consolidate all the firm’s spend activity to preferred suppliers. This allows the firm to leverage quantity discounts and preferred contracts – a major source of instant savings.

• Better Control of Outsourcing Agreements

In spite of the trend towards outsourcing and subcontractors, few law firms have formalised procurement processes when selecting services and even less run a similar process when renewing agreements. Effective process controls must be established to structure, streamline, and track the entire sourcing process from requirements specification, through to the publishing, response and evaluation of requests to suppliers/contractors, and ultimately, to the award and management of contract.

• Keep Track of Contract Compliance

Contract and Supplier Relationship Management are key Spend Control areas for law firms. Nothing is worse than one of their many high value contracts tripping over into the next financial year and missing the chance of review and renegotiation; nor when supplier qualification is too subjective, providing little visibility of risks. What is needed is a well-structured set of tools to support efficient, consistent supplier recruitment, qualification, on-boarding, and performance appraisal.