Prepare for the unexpected – a well-worn phrase, and for good reason
Unforeseeable events and costs can, and do, arise that will put immediate pressure on even the most prudent financial plans, says Mike Stevenson, managing director at Iceberg.
A situation recently sprung up in Manchester when the Crown Court was suddenly forced to close so the building could be tested for asbestos. What was expected to be a five-day closure soon became two weeks of delayed or reorganised cases.
Not even the most assiduous firm would plan for such a specific eventuality, but it could still impact a firm’s business schedule and may well push back payments from clients. Suddenly, and out of nowhere, a well-managed firm may have a cash flow shortfall through no fault of its own.
That the unexpected closure of Manchester Crown Court follows soon after Bolton Crown Court had to adjourn due to the risk of new lights falling down speaks to the uncertain environment in which law firms today operate!
It isn’t though just the unpredictable, knock-on effects of crumbling building infrastructure that can impact a firm’s balance sheet, or even just negative news.
A firm experiencing sudden growth in its client base may need to expand its team, and with a growing team comes the potential costs of acquiring Practising Certificates.
Also, rather than simply wishing to expand its existing team, a firm unexpectedly could be presented with the option of acquiring another. A great opportunity that they may not wish to miss, and one for which there financing options available.
These are both positive developments that may have been unforeseen six months before they became a reality, and firms may wish to seek financial support to ensure that they are able to make the most of these unexpected opportunities.
Firms seeking such support can take comfort in how common a practice it is to seek financial support, whether it be over a period of months or years. What may seem to some as a sign of failure to be prepared is in fact simply an entirely routine feature of sound operations.
In many cases the risk lies in not taking the opportunity and support available, not in the sudden financial shortfall itself – and firms should be prepared to explore the options available to them.
As we head towards autumn there is also another event for which we couldn’t have prepared – a new government led by a new prime minister. Both candidates, Liz Truss and Rishi Sunak, are expected to reform the tax system. The candidates also speak of cutting further redtape, which may not only impact law firms but also their client’s operations.
Both such changes may come with a sudden increase in demand for legal advice to help understand the new regulatory environment, as well as the need for law firms themselves to seek advice on their own financial operations.
Rather than preparing for the unexpected, perhaps it would be better to simply to expect change and accept it will happen. Firms that are aware of the financial support and options available to them, and have them at hand, are taking sensible steps and doing what they can to be ready for the inevitable.
