A Finance Option for Growing Legal Practices

By Nick Aronson - 2 July 2011

Nick Aronson (above), General Manager of The Leasing Centre, outlines an alternative to bank funding

Small law firms face a serious challenge when it comes to growing their businesses - the challenge of funding growth.

Law firms need to invest in technology, software, legal research libraries as well as maintain modern, professional work environments. Major financial institutions generally will not provide finance for practice management software yet such software is often the key to running an efficient practice. 

Investment in IT, telephony and mobility solutions are no longer optional for today's law firms striving to provide effective customer service. Equally, modern office space and reception areas not only need to be functional but have the important role of conveying a firm's image.

Investment in these resources can seriously impact cashflow. Software and IT equipment necessary to run a professional services practice are not only expensive but they are becoming outdated at an ever faster rate. In this fast moving environment, outright purchase of equipment involves a large outlay of funds. 

Upfront purchase of equipment or resources through cash or a bank facility may not be tax effective. It also restricts firms from updating or changing equipment as new innovations hit the market. One option could be to sell the older product and reinvest funds in new resources. However, equipment depreciates quickly, leaving the firm with less to reinvest.

There is another option for professional services practices who want the flexibility to acquire the latest software and IT equipment whenever there is a need. Having a flexible finance facility option in place has many advantages.  It allows firms to spread payments over the useful life of the equipment. 

This is a bonus when managing cashflow and leaves the business with capital to invest into other areas of the practice. Additionally, finance facilities are often tax friendly with monthly payments 100% tax deductable if used for business purposes.

Just as important is what happens when the equipment comes to the end of its useful life.  Professional services firms need the flexibility to upgrade or replace resources at any time, ensuring that they are not left with outdated equipment or software. This way, firms can invest for growth - ensuring that they have the option to access the market leading equipment and resources that will enable them to develop and grow their businesses. 

When it comes to putting in place a flexible finance facility, law firms can work with organisations such as The Leasing Centre who specialise in financing software  and other business equipment including IT, telephone and software requirements. 

Unlike banking institutions, these organisations are able to offer specific tailored solutions designed to secure the equipment and online esources required for growth, while making it tax effective, cashflow friendly and flexible. The Leasing Centre believes that every finance strategy should be specifically designed to help bridge the gap between growth objectives and budget limitations thus ensuring that law firms are able to access necessary equipment and IT resources for their business.

www.theleasingcentre.com.au 

© 2011 Legal Practice Intelligence & The Leasing Centre