“Sustained profitability is the key for the long-term survival of a professional service firm”. This may seem an obvious statement to make but there are many firms who do not optimize their financial potential due to the way they are organized or managed. Sometimes firms only react when levels of profitability begin to decrease, when in fact there have always been opportunities to improve economic performance.
Identifying, measuring and understanding the right data and being able to propose and implement solutions to enhance financial performance are key to financial management. A skilled and well-organized financial function with the appropriate resources can achieve that while at the same time ensuring smooth financial operations. Edge consultants apply their decades of experience successfully financially managing firms of all sizes, from global organizations to small sized practices, to assist in this process.
Financial analysis is at the heart of everything we do in our consulting work. We focus on the key drivers of profitability: productivity (how effectively professionals work), billing rates and realization (the competitiveness of a firm’s rate and pricing structure), margin (cost management and amount available for partner compensation) and leverage (the firm’s ability to push work to the lowest cost level). We review these at different levels (firm-wide, practices, sectors, business units, geographies) and evaluate matter and client profitability.
Such analysis allows us to advise firms on their financial planning and how to achieve superior financial performance. In particular, we regularly…
- Help firms crystallize the financial issues that must be addressed through a comprehensive review of their financial operations which includes but is not limited to:
- a review of financial governance (the use of, and control over, partnership funds and the related reporting and accountability)
- practice management procedures
- client relationships and pricing structures
- time management, billing and collections (inventory management)
- cost management
- cash flow management
- banking relationships
- staff structure and competencies
- Highlight the options faced by firms in refining their business recipe and in planning business process improvements
- Suggest improvements to a firm’s budget and cash management processes
- Advise on best practice for financial management reporting by teams, practice groups and firms
- Advise on financial alignment for firms considering mergers and affiliations (see Mergers and Affiliations)
- Carry out training and coaching in relation to financial competencies and the improvement in time recording and timekeeping
- Advise on pricing approach/alternatives and legal project management (see Pricing Approach and Alternatives)