The legal market today is arguably more competitive, and more volatile, than ever before.
Of course, the actual legal services that a law firm provides are what drives reputation, client base and revenue, but today more than ever, it’s equally as important that law firms run a well-oiled, proactive commercial strategy to ensure long term financial success.
It doesn’t matter how well qualified your lawyers are, if you’re not planning ahead in a commercial sense, the unpredictable and ever changing nature of the legal landscape will cause problems. Whether it’s the rising costs of PII renewals, VAT late payment penalties, or else, there are always obstacles to navigate for law firms.
The key is to maintain a healthy cash flow position wherever possible. Cash in the bank means more than just security and peace of mind. It means that your business can be adaptable, it means that your business can stomach rising or unexpected expenses, and it means that your business can be proactive with its growth plans.
One of the best and most underutilised tools available to law firms is the option of raising commercial finance at opportune times throughout the year and/or lifecycle of the law firm.
Let’s explore some of the ways that a law firm can benefit from raising finance and discuss the best ways to go about this.
Common Uses for a business loan for law firms:
1 - PII Renewal
We’ve discussed this a fair bit recently, and for good reason. PII renewal is one of the largest expenses in a law firm’s calendar each year, and past increases in renewal premiums have only exacerbated this.
There are several steps that every law firm should take to ensure they navigate the renewal process as smoothly as possible, but even with the best planning in place, cash flow often takes a substantial hit.
This is where a business loan can help. Raising funding to cover your PII renewal allows you to maintain a healthy cash flow position while making your PII renewal payments. Protect your cash flow and carry on trading with confidence and a long term focus.
The key here is to ensure that you work with a broker like Gemstone Legal as early as possible. The more time that you can give a finance broker, the more likely it is that they will be able to source the right finance for your business. PII deadlines come around fast, and you don’t want to be scrambling to raise funding at the last minute.
2 - VAT/Tax
In a similar vein to PII, funding to cover VAT and tax bills is something that a lot of law firms take advantage of.
Law firms are required to pay their tax bills every quarter, and so it's likely that throughout the year there may be periods where cash flow is strained to unhealthy levels.
With the HMRC’s new penalty system now in place for late VAT payments, it’s a slippery slope once you miss a deadline.
A business loan for your VAT bill allows you to cover your VAT payments, avoid potential penalties and maintain cash flow with manageable payment terms.
There are several different loan options available to law firms with regards to VAT finance, and so it’s crucial to work with a finance broker like Gemstone Legal that knows the legal industry and has access to products specifically designed for this purpose.
3 - Business Development
Of course, business loans for law firms can be used for a multitude of purposes, not just covering PII and tax commitments.
As we’ve discussed, in a changing, volatile economic environment and industry it’s crucial to be proactive with your long term commercial strategy.
Whether it’s new IT equipment, recruiting the best new talent, or upgrading branding, the law firms that have the ability to invest in their business are the law firms that are more likely to succeed.
A business development loan can give your law firm that ability. Raising finance to invest in your business can be a great tool for growing law firms, and at Gemstone Legal we have experience helping a number of law firms on this journey.
The importance of using the right broker
The commercial finance world can be a bit of a confusing place at the best of times… There are more and more options available with regards to finance than ever before, each with their own specific use cases, requirements and application processes.
Every business loan application that is submitted is done so by law firms that have unique characteristics, finances and reasons for needing the loan.
The difference between securing the right loan and the wrong loan for your specific law firm can be vast, and that’s why it’s so important to work with a finance broker that understands the legal industry.
At Gemstone Legal, we don’t only broker the best available deal for your law firm. We work with you throughout the whole application process, offering advice on how to best position yourself to ensure that you secure the right deal, and helping you to optimise your overall financial stability.
To discuss how we can help your business, book a call with us today.
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