A POOR CASHFLOW SITUATION -- A MILLSTONE FOR MANY FIRMS -- CAN USUALLY BE TURNED AROUND.

MICHAEL MCCABE ADVISESMaintaining good cashflow is one of the main pressures facing firms today.

However, there is usually some positive action that can be taken to remedy or alleviate a poor cashflow situation.Firms usually get into financial difficulties because they rely on billing and work in progress figures when analysing the health of their business.

This can lead to undue complacency.Many firms still have a culture of secrecy in relation to finances and will not give staff financial information in case they calculate the firm's profitability.

However, keeping fee earners in the dark abo ut the firm's finances means that they will be unable to exert extra effort when required.

Start by giving fee earners billing and cash collection targets of three or four times the basic salary cost.

The performance of each individual should be monitored by the head of department.All firms should have a cashflow forecast.

Build the expected monthly billing figures into the major items of expenditure to identify borrowing requirements for the coming year.

Many firms are nervous about giving fee earners financial information but once the forecasting has taken place there is no reason why the staff should not be told of the monthly cash requirement and updated on performance against it.

Most fee earners believe that the weekly cost of employing them is their salary.

Their outlook changes dramatically when they realise that they probably need to collect £1000 per week before the firm makes any profit.The following five measures can bring immediate benefits:-- Introduce a rule that an annual interim claim must be made on all legal aid files.-- Identify all private files with unbilled time of more than £1000.-- Take advantage of concessions allowing VAT to be reclaimed on unpaid bills more than six months old.-- Do not pay disbursements.-- Reduce staff or alternatively use a profit related pay scheme to reduce salary costs.Ensure that maximum return is achieved from the bank by placing deposits on the money markets where possible.

This could increase interest received thereby reducing borrowing costs.RICHARD BARK-JONES HAS SOME POINTERS ON ADVICE FOR ELDERLY CLIENTS TO SECURE THEIR ENTITLEMENT TO FUNDING FOR LONG TERM CAREElderly clients frequently need advice about their eligibility for local authority funding in regard to residential and nursing home care.

They will need advice on how to deprive themselves of assets to make themselves eligible for full funding.-- If the relevant capital is under £10,000, there is no contribution but if the capital is between £10,000 and £16,000, contributions are made on a sliding scale-- The local authority will assess the standard rate and is under a duty to assess ability to pay and to notify the resident of the pay towards the standard rate.

In assessing ability to pay, the authority will assume that the resident is in receipt of all income to which he or she is entitled.-- In assessing the value of realty, the authority will disregard the value of the former home if occupied by a spouse or a relative who is over 59 or is incapacitated.-- Income to which the resident is entitled will be taken into account, even if not paid, likewise in relation to capital.-- If a resident at any time passes up capital or income in order to reduce or avoid a liability to pay or contribute towards fees, the resident will be assessed as if he or she still owned or retained the capital or income.

For the authority to avail itself of these powers it need not be proved that it was the only or main motive, it will be sufficient if it was a significant one.-- If the disposal of capital or income to a third party takes place within six months of entering accommodation, or whilst the resident is in accommodation, and the motive described above is present, the authority can recover fees from the third party.

They can do this even if the third party has no knowledge of the motive.-- The local authority has the power (under Section 22 Health and Social Services and Social Adjudications Act 1983) to recreate a charge on land or an interest in land belonging to a resident.

Thus if the resident is a joint owner the charge will fix on his or her beneficial interest.