In the first article of this series, I reflected on the fact that typically new clients approach Cashroom when they’re rethinking their finance function. There are many reasons why they do so, and I gave 8 examples in the article.
I wanted to pick up on one of them in this article – when the client is setting up a new firm from scratch.
As I mentioned in the first article, I did this in 2005, when with 3 others I set up MBM Commercial LLP, creating a law firm from a blank piece of paper.
The great privilege of starting a new firm, is that you are not constrained by the past – there is nobody saying to you “but that’s the way we’ve always done it”. You can approach everything from a fresh perspective, with no historical baggage.
And this applies to your finance function. When I set up MBM in 2005, I was not “financially sophisticated” (embarrassingly I had to have the difference between profit and cashflow explained to me … more than once!). But I knew I had to get it right and did not want to be kept awake by worrying about compliance, and the accuracy of our numbers.
Happily I had the freedom to ask the crucial question “is what we did in the past, the right choice for where we are now?”.
At that time, there were no outsourced provider of cashiering services to lawyers. Given our size at the time, my only real option was to employ somebody to be our cashier. But that was far from optimal – I worried about
- How could I recruit somebody for a role that I knew nothing about? How would I know what “good” was?
- Even if I did recruit a competent cashier – how would I supervise them? How would I know whether what they did was right, or efficient, or compliant?
- Our size didn’t really justify a full-time cashier … but what happened when it was the cashier’s day off?
- What happened when they were on holiday, of off sick?
- Employing 2 cashier’s to provide cover, hardly seemed optimal – but how could I be sure?
- And what happened if they made a mistake? As an employee their mistake was my mistake, and any liability would be picked up by my PI Policy.
- And finally, where was I going to find the time to do all this stuff, when as a start-up business I needed to spend all my time with my clients.
The traditional solution really wasn’t optimal!
It didn’t happen straight away, but over time I worked toward a better solution, which had the following features
- The right cover, at the right cost. Somebody to deal with my cashiering 9-5, five days a week, but without the need for a full-time employee.
- A service that didn’t take a holiday and was never sick.
- A cashier that looked after themselves and was managed by people who knew way more about accounting than I did.
- And finally, the peace of mind that if something did go wrong, somebody knew how to sort it, and carried PI insurance if the “worst came to the worst”.
And that was the Genesis of Cashroom.
I tell this story because it’s an example from my own experience of stopping and pausing and asking the question. “is what we did in the past the right choice for where we are now?”.
Often it’s not.