Posted on 18/08/2019 by admin
After the implementation of a time recording system, see our blog, the next step is to monitor your work in progress.
The benefit of recording time and monitoring your work in progress (WIP) is to ensure that you are making adequate recoveries on the work that you do. If you are not recovering your costs, then you won’t be making enough profit or may even be making a loss.
So how do you deal with Work in Progress?
Write it off when you raise the bill
All fee earners that raise bills should ensure that they print a WIP report and then write off any time in connection with that bill. The time being written off should be compared to the amount billed to establish the level of recovery. If more time is being written off, then the fee earner should understand why this is as they are not recovering all of their time.
You should also consider a firm policy where write offs, of more than £250 for example, should be discussed and approved by a partner.
Monthly WIP Review
Every month all fee earners should print off their WIP balances report. A review should then be undertaken of all unbilled WIP. This can be used to identify:
a. Whether anything needs to be billed that has been missed. A bill can then be raised accordingly.
b. Whether there is any old time sat on the ledger that will never be recovered. This can be written off whilst adhering to the value of the write off policy mentioned above. Again, the fee earner should understand why the balance is being written off in the first place.
Another benefit of undertaking this exercise is that it can be tied in with:
a. Chasing unpaid invoices
b. Closing client files that are complete
c. Repaying outstanding funds held in the client’s account that are no longer required.
Once WIP procedures are being monitored on a regular basis, it gives you the ability to monitor staff performance more effectively.
For example, is a particular member of staff or specific department making regular under recoveries?
Once this is established you can then work on ways to improve their results.
By having an accurate WIP value, the monthly management accounts can be adjusted to correctly smooth out income into the periods when the work is done, rather than when it has been invoiced.
For example, a large probate case may take years to complete but the staff costs have been incurred throughout this time.
If you would like more information or help with implementing WIP monitoring then please get in touch with us firstname.lastname@example.org
Dedicated Accident Solicitors
Just leave us your contact details, some basic information and we’ll get back to you