24 finance
Legal firms cautioned to boost financial management
South Coast business and tax adviser CW Fellowes is advising professional legal firms to bolster their financial management practices, following changes in government policy regulations, and the abolishment of the Assigned Risks Pool (ARP) by the Solicitors Regulation Authority (SRA) in October.
The SRA recently identified over 1,300 legal firms as being at high financial risk, due to their dependence on certain types of work, such as personal injury, legal aid, crime, and scale conveyancing.
CW Fellowes’ managing director Adam Wilson encouraged these firms to engage with the SRA as soon as possible, to reduce risk to their clients, and gain the support from the Authority to help them return to a sound financial footing.
Wilson commented: “Changes to legislation will leave many legal firms financially exposed and at risk of closure. With the policy changes and the ARP safety net soon to disappear, legal professionals need to take steps to remain buoyant in this particularly difficult economy.
“The support offered by the SRA will not come in the form of a blank cheque, however,“ he added, saying that assistance from the SRA will be given
only if legal partners are willing to make changes to manage their finances better.
“The SRA will want to see financial information relating to each firm, including net profit and drawings.“ Drawdowns by partners, particularly those not made on the achievement of key performance indicators, are the greatest de-stabilisers of most legal firms.
Borrowings will also come under the scrutiny of the Authority. Wilson continued: “It is not uncommon for firms to use short-term borrowings to fund partners’ tax, or use VAT received as cash received.“
Legal firms are traditionally heavily dependent on high overdraft borrowings and very often, capital injection by partners is 100% borrowed.
Wilson said: “With key financial information often not being shared between rank and file partners and senior managers on a regular basis, uninformed decisions are being made.“
He advised legal partners to gain a good hold of their firms’ account bank balances, and to stress-test profitability on a regular basis.
Majority of SME FDs would up headcount
Despite the Government’s intervention to boost lending with initiatives such as the Funding for Lending Scheme, new research from leading recruitment specialist Robert Half UK, shows that more than two thirds (67%) of CFOs (chief financial officers) and FDs (finance directors) in SMEs would increase headcount if they had access to lending. Furthermore, 86% believe that increased lending to SMEs will help ease unemployment.
While the latest ONS figures indicate that employment rose by 69,000 in the three months to June, unchanged from January to March at 7.8%, finance leaders indicate that more can be done. In fact, the majority (96%) of CFOs and FDs called on lending institutions to do more to increase finance to SMEs, and help support growth. Indeed, since the start of the recession, four in 10 (38%) finance leaders at UK SMEs have been turned down for lending, despite the potential benefit this would have on employment.
Midlands-based firms appear to be worst affected by the lack of lending. According to the research, 43% of finance leaders have been turned down for extra lending since the start of the recession. This is closely followed by those based in London and the South East (40%).
Seven in 10 (70%) SMEs in the South West and Wales would be most likely to increase headcount, followed by the Midlands (68%).
Morris Crocker appoints four new client directors
Morris Crocker, one of the south’s leading independent firms of accountants, has promoted four of its senior managers to client directors
After operating for 123 years as a partnership, the firm changed its company status to a limited company from July 1, 2013.
Kevin Gilbert and Richard Perry, the founder directors of Morris Crocker and previous partners in the Morris Crocker Partnership, see
the promotions as an important step in the progression of the firm which will allow it to continue to provide high standards of service to its clients.
The four new directors are Pete Farrier, Duncan Gardner, Martin Southern and Paul Underwood.
Between them they have given Morris Crocker nearly 40 years of service and are well placed to offer small to medium local businesses their experience and knowledge in a wide range of tax and accountancy matters. All four are also key members of Morris Crocker specialist teams serving doctors, dentists, charities and professional firms.
Morris Crocker is a team of chartered accountants, registered auditors and business advisers who offer tailored, cost-effective services and solutions for businesses and private individuals. With 60 skilled and experienced staff, it is one of Hampshire’s long-established and largest independent firms of accountants. As the UK economy recovers from the financial recession, the firm can help businesses to grow while providing essential support and minimising their tax liabilities.
Details:
023-9248-4356
mc@morriscrocker.co.uk www.morriscrocker.co.uk
From left: Richard Perry, Paul Underwood, Martin Southern, Pete Farrier, Duncan Gardner, Kevin Gilbert
www.businessmag.co.uk THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – SEPTEMBER 2013
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