The Hidden Costs Within The Cashroom? (Updated July 2023)

The Hidden Costs Within The Cashroom? (Updated July 2023)

There are lots of reasons why a law firm may look to Outsource its Legal Cashiering. There is no single rule, every law firm is different. In this article, we highlight the key reasons below and also provide a calculator (using verifiable UK average statistics) so you can work out the cost savings specific to your legal practice.

The key reasons a law firm may look to Outsource its Legal Cashiering?

What other costs should be considered?

Legal cashiers are a valuable resource for law firms, but securing their services can be a time-consuming and expensive endeavour, particularly when recruitment agencies are involved. The UK average salary for legal cashiers (excluding London) was £24,000 in 2023, according to the Institute of Legal Finance & Management 2023 Legal Accounts Salary Survey. However, there are additional expenses to consider when evaluating the actual cost of hiring or supplementing your finance team. Legal cashiers typically operate within a firm’s finance department and are responsible for processing account transactions while ensuring compliance with regulatory accounting guidelines. Furthermore, legal cashiers may also be required to handle office management or HR duties. Our calculator factors in this reality by permitting the user to specify the percentage of work linked to the cashroom process.

Recruitment

In the event that a recruitment agency is utilised, a 15% fee is the average for legal cashier placements. This amounts to £3,600 based on the UK average salary of £24,000 for legal cashiers outside of London. It should be noted that there are still further costs associated with the induction process that we have not taken into account, such as training and deferred productivity.

Salary Costs

The current employer national insurance rate for income above the secondary threshold is 15.05%, with auto-enrollment contributions at 3%. This results in annual national insurance payments of £2056.20 and auto-enrollment contributions of £720, based on the legal cashier’s salary. Depending on the law firm, additional salary-related costs such as private medical insurance may also need to be factored in.

Licenses, Software and Expenses

In terms of overheads, Lambert Smith Hampton Total Office Cost Survey 2023 suggests that the cost per square foot to host a team member in a 20-year-old building is £71.32 taking into account rates, IT, insurance phone and energy costs. A generous allocation of 100 sq ft per person allows 50 sq ft for desk space and another 50 sq ft to accommodate room in communal areas such as meeting areas and kitchens. If we go with the lowest allocation at 50 sq ft this works out to £593.25 per month.

IT, HR and Management

It is advisable to allocate 5% of the legal cashier’s salary to cover IT, HR, and supervisory expenses. This amounts to an additional monthly cost of £96 based on the legal cashier salary. It should be noted, however, that not all of these expenses may apply to every legal practice, such as the need for a recruitment consultant. Our calculator allows for easy customisation of these figures to generate a cost estimate tailored to your law firm. The calculator defaults are based on industry averages outside of London

Use the calculator below to work out the hidden costs specific to your law firm.

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Outsourcing also means that you have access to a pool of resources.

Making your law firm more agile.

Engaging an Outsourced Legal Cashiering service enables the elimination of several cost layers since you only pay for the services you require, as and when you need them. With instant on-demand access to services, scaling up or down to meet the demands of your business or economic climate is seamless. In addition to core business functions, a comprehensive range of professional services is also available for your law firm’s use at any time. For example, if cash flow is a concern, credit control services can be activated. If additional staffing is required to cover unexpected absences or holiday leave, our team of legal cashiers is readily available. If compliance is an issue, our service includes conducting mock regulatory inspections bi-annually.

Outsourcing brings a team of skilled cashiers to your firm.

Instant access to a dedicated team.

By opting for our Outsourced cashroom service, you gain more than just a single Legal Cashier. You have access to an entire team dedicated to providing a friendly and professional solution for your law firm. Your designated team will comprise two experienced outsourced legal cashiers working remotely, who will communicate with you through secure channels to ensure prompt action on your instructions. You will develop a working relationship with your team, just as you would with in-house staff.

Outsourcing eliminates concerns about sickness or holiday coverage.

Holiday, absence and emergency cover.

By outsourcing your cashroom process, you will have the added benefit of a dedicated backup cashier to provide cover when individuals are absent or on holiday. Even if you have an in-house cashroom, we offer short-term contracts for holidays, long-term absences, and emergency cover. We can seamlessly pick up from your own cashier and follow the same familiar processes and procedures to ensure continuity of service provision.

Outsourcing minimises disruption and safeguards finances and reputation.

Business continuity planning.

In the event of major disruptions, such as pandemics, fire, flooding, cyber-attacks or terrorist attacks, it is crucial for your law firm to maintain service levels for your clients. A Business Continuity Plan (BCP) helps you identify potential threats and provides a framework for an effective response to any disruption. By incorporating outsourced legal cashiering into your BCP, you can ensure that your cashroom continues to operate even if your legal practice is impacted.

Thank you to the following resources for making this article possible:

Institute of Legal Finance & Management Salary Survey (2023.)

The Legal Accounts Salary Survey 2023 offers current salary data for various positions, including legal cashiers, assistant legal cashiers, senior legal cashiers, cashier supervisors, and head cashiers.

Lambert Smith Hampton Total Office Cost Survey 2023

Providing up-to-date detailed information on office costs for over 50 UK locations from The Total Office Cost Survey (TOCS) which is the most definitive independent survey of its type.

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