Your accounts are being finalised, tax records should be in order, and another EOFY has been ticked off the list — which makes this the perfect moment for a law firm financial health check.
Now comes the important question: What do the numbers tell you about the next six months?
For many law firms, July is the ideal time to move beyond compliance and start using financial data to make informed business decisions. Rather than waiting until next June to assess how the practice has performed, a mid-year financial health check allows you to identify opportunities, address challenges, and set your firm up for a stronger second half of the year.
The question isn’t simply, “Did we get through EOFY?” It’s “Are we on track to achieve our business goals?”
Why July Is the Perfect Time for a Financial Health Check
With EOFY reporting complete, you now have an accurate picture of your firm’s financial position.
This is the perfect opportunity to review your performance, identify trends, and make strategic adjustments while there’s still plenty of time to influence your results for the remainder of the calendar year.
Think of it as a business planning session backed by real financial data—not just another accounting exercise.
Review the KPIs That Matter Most
Your bookkeeping records provide far more than compliance. They offer valuable insights into how your practice is performing.
Some of the most important KPIs for legal practices include:
Revenue Per Fee Earner
How much income is each solicitor generating?
Monitoring revenue per fee earner helps you assess productivity, manage workloads, and identify opportunities to improve efficiency across the practice.
Billable Hours and Utilisation
Are your fee earners recording enough billable time?
Low utilisation may indicate administrative bottlenecks, pricing issues, or workflow inefficiencies that can impact profitability.
Work in Progress (WIP)
Healthy WIP is important—but excessive WIP can tie up revenue that hasn’t yet been invoiced.
Review outstanding matters and ensure completed work is being billed promptly to maintain healthy cash flow.
Debtors
Outstanding invoices affect more than cash flow—they reduce certainty.
Take time to review:
- Average debtor days
- Overdue accounts
- Collection procedures
- Payment trends
Small improvements in debt collection can make a significant difference to your firm’s financial position.
Trust Account Compliance
For Queensland law firms, trust accounting remains one of the most critical financial responsibilities.
Regular trust account reconciliations and ongoing monitoring help ensure compliance while providing confidence that your records remain accurate throughout the year—not just at audit time.
Look Beyond Revenue—Review Your Profit Margins
A busy practice isn’t always a profitable one.
After EOFY is an excellent time to assess whether increased revenue is translating into improved profit.
Review your major expenses, including:
- Staff wages and employment costs
- Office overheads
- Outsourced services
- Marketing expenditure
Ask yourself:
- Are these costs delivering value?
- Can any processes be streamlined?
- Are there opportunities to automate repetitive administrative tasks?
Even modest efficiency gains can have a meaningful impact on your bottom line.
Compare Your Business Plan to Reality
If your firm set financial goals or prepared a budget at the beginning of the year, now is the time to compare expectations with actual performance.
Consider:
- Are you achieving your revenue targets?
- Have expenses increased more than expected?
- Which practice areas are performing well?
- Which services generate your strongest profit margins?
- Are there areas of the business that require greater focus?
Understanding these trends allows you to make informed decisions rather than reacting when the next EOFY arrives.
Keep a Close Eye on Cash Flow
Profit doesn’t always equal cash in the bank.
Even successful law firms can experience cash flow pressure if invoices remain unpaid or large expenses arise unexpectedly.
Now is a good time to review:
- Current cash reserves
- Upcoming BAS and tax obligations
- Payroll commitments
- Expected cash flow over the next three to six months
Cash flow forecasting provides confidence and helps you plan for recruitment, technology investments, or business growth without unnecessary surprises.
Set Clear Goals for the Months Ahead
Once you’ve reviewed your financial performance, turn those insights into practical goals.
Your priorities may include:
- Reducing debtor days
- Improving billable hour targets
- Increasing profit margins
- Strengthening trust accounting processes
- Investing in technology to improve efficiency
- Expanding profitable practice areas
Setting measurable objectives now gives your firm time to implement changes and monitor progress before year-end.
Your Bookkeeper Should Be a Strategic Partner
Specialist legal bookkeeping is about far more than reconciling transactions.
A bookkeeper who understands legal practices can provide meaningful financial reporting, monitor key performance indicators, maintain compliant trust accounting, and help you understand what your numbers are saying.
When your financial information is accurate and up to date, you can make confident decisions that support sustainable growth.
Final Thoughts
EOFY may be behind you, but the opportunity to strengthen your business is just beginning.
July is the ideal time to review your firm’s financial performance, assess your key performance indicators, monitor profit margins, and ensure your business is heading in the right direction.
The firms that regularly review their financial position are often the ones best equipped to adapt, grow, and improve profitability throughout the year.
If it’s been a while since you’ve looked beyond the compliance reports, now is the perfect time for a law firm financial health check.
