For many firms, the traditional paths to cost savings might seem well worn.But often, revisiting these areas can still yield substantial cost containment. Read on to learn five prime areas to investigate.
Audit Your Lease
Landlords build expense escalation clauses into leases to compensate for increases in labor costs, energy fluctuations, repairs and other factors. An audit may reveal that some of these escalations were not well–substantiated or based on a highly aggressive position — giving you room to negotiate. Further savings may be at hand if your building is not fully rented or has chronic trouble retaining tenants. The landlord may be motivated to keep a good tenant. This gives you the leverage to renegotiate a new rate or extend your current rate for additional years.
Explore Alternative Benefits Options
The cost of providing benefits continues to be a profitability siphon, and it is sound policy to explore different providers to gauge whether you are getting the most out of your benefits dollar. Alert your current provider that you are looking at competitors and use what you have learned to renegotiate your contract. Consider engaging a consultant to help you navigate this complex area. Among the options to consider are multiple tier plans, Preferred Provider Organizations (PPOs), Stop–Loss policies and self–insurance options.
Tally up More Client Disbursements
Any of the following steps can add to your bottom line:
Eliminate Waste in Travel and Entertainment Expenses
Your first steps should include imposing stricter controls and a higher–level approval process on nondiscretionary travel and entertainment. Consider if you are making the optimum use of virtual meeting technology. Of course, travel and entertainment is an essential part of a law practice, so it is prudent to introduce an automated expense management system supported by policies that require that partners promptly report and verify all expenses. To further reduce costs, set a policy that requires partners to practice the same restraints they do in private life, such as searching for the best rates for airfares and hotels. Also, assign a staff member to monitor travel and entertainment expenses and identify red flags and questionable costs.
Refinance While You Still Can
The current low interest rate environment may seem like the new normal, but nothing lasts forever. Look into the firm’s outstanding loans for circumstances where a refinancing could make sense. A little upfront expense might yield many years of substantial savings. These five broad areas can serve as a springboard to help you explore additional opportunities for savings. Rather than a one–time effort, make this exercise a regular part of the firm’s routine and permanent component of a culture of overall efficiency. Every firm is unique and while not all these suggestions will work for your firm, they demonstrate that the field remains wide open. What you considered once before may be worthy of a second look.
About the Author
Marianne Reidy, CPA, is an audit principal with Berdon LLP, a full–service CPA and advisory firm. Reidy has worked with Berdon for more than 15 years, specifically with professional service firms. She evaluates and sets up internal controls, assists in benefit calculations for retired partners, and implements time and billing systems.
Learn more about Berdon LLP
From the 1.2.14 edition of ALA Currents