The vast majority of law firms are already or in the throes of or are about to experience a marked decrease in revenue, whether to closed courts, stalled transactions, or simply because clients are pulling back and paying more slowly.
For a very small minority of law firms declining cash balances aren’t a problem thanks to a strong contributed capital position. But, these are few, and far between.
For everyone else, improving the cash position will be necessary to weather this storm. To strengthen liquidity, we recommend the following six steps:
- Establish a rolling 60-day cash forecast and monitor performance to it every day.
- Evaluate existing credit facilities to determine what funding is available to you.
- Initiate conversations with your bank related to increasing or extending credit.
- Determine what if any funding will be available to the firm from the government’s stimulus package.
- Slow vendor payment in all possible cases and contact major vendors (landlords) to gain their support for partial payment deferrals.
- Immediately consider decreasing the level of partner (shareholder) draws.
In our experience, there are strategic processes and conversations around each of these ideas that will accelerate solutions which will ease pressure, reduce stress, and help provide stability. And we are committed to providing help.
If you would like to explore your best options, we’re providing a no-cost 30-minute consultations for as long as our schedules permit. Send us a note to either email address below, and we will respond as soon as we can.
Roger Hayse – Rhayse@HayseLLC.Com or
Andrew Jillson – Ajillson@HayseLLC.Com
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