RPC has introduced a “mini year-end” in a bid to improve the firm’s overall cash-flow position and reduce the traditional end of year rush to get bills out the door.
The February ‘year-end’ was introduced earlier this year by RPC CFO Steve Rowan, who joined 12 months ago from legacy Edwards Wildman.
“The idea is simply to reduce the pressure on the year-end month,” said Rowan. “We all look at the stats around the percentage of billing in the last month of the financial year and know the importance of lockup, so this is about trying to reduce the pressure at year-end that everyone faces and spreading the workload prior to the run-in.”
The impact, reported in this year’s UK 200: Financial Management report, was significant. RPC’s year-end lock-up was cut by 20 days, or 17 per cent, from 115 days to 95 days in 2015/16.
The reduction was on both sides of the lock-up equation, with work-in-progress (WIP) dropping by five days from 20 in 2014/15 to 15 and debtors dropping by 15 days from 95 the previous year.
Average lock-up across the year at RPC at the 2015/16 year-end stood at 130 days (44 days WIP and 86 debtors).
Rowan denied that the firm had “done anything particularly revolutionary”, adding that much of financial housekeeping comes down to “regular, open and grown-up communication” by the finance team with the firm’s internal clients.
“In that sense, the relationship is not that dissimilar to that which our lawyers have with their external clients,” added Rowan. “That said, I think we’ve made a real effort to get closer to them over the last couple of years, making sure there is a robust year-round and day-to-day focus on good financial hygiene rather than one mad push at year-end.”
To that end and to ease the pressure that comes with the close of the financial year, RPC initiated the mini year-end in February.
“That certainly seems to have had a positive impact on a number of levels,” said Rowan.
RPC’s 17 per cent reduction in WIP put it third in The Lawyer’s table of firms ranked by WIP reduction behind Gowling WLG (down 31 per cent), and Wiggin (down 85 per cent).
The firm was also fifth in the table of firms ranked by reduction in lock-up behind Sackers and Muckle (both down 19 per cent), Bevan Brittan (down 20 per cent) and Bond Dickinson (down 22 per cent).
The Lawyer UK200: Financial Management 2016 report was published on Monday 12 December. To purchase the full report please contact Richard Edwards on 0207 970 4672 or firstname.lastname@example.org
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