BUDGETING AND
FORECASTING
What is a budget
It is a guide and not etched in
stone
 Revenue budget
 Expense budget
 Cash flow budget
 Capital needs budget

Expense Budget Example
Budget should be formatted in line with
the firm’s chart of accounts
 Income statement should be reported with several
columns of information. This may require special
programming to your software
–
–
–
–
Actual expense for the month
Actual expense YTD
Budget allocation YTD
Over/under budget for this period: Variance of ‘Actual
Expense YTD’ against ‘Budget Allocation YTD’ (per cash
flow budget)
– Annual budget allocation
– Over/under budget: What has not been spent as a
percentage of the total budget
Example Income Statement Compared
Against Budget
Excerpt
Var
Var
Expense MTD YTD BTD BTD AnnBud v. AnnBud
Library
378
700 1,000 -30%
7,000
-90%
Revenue Budget Example
Individual Attorney
2,530
46 weeks x 55 hours per week
1900
300
200
hours on
hours on
hours on
and staff
hours on
hours on
100
30
client files
marketing
practice mgmt
supervision
firm management/other
pro bono
(in thousands)
Rev
Jan
Feb
Mar
Apr
May Jun
Jul
Aug
Sep
Oct
Nov
Dec
Tot
Atty 10
Prac
10
30
10
10
50
10
10
10
10
10
100
XX
Atty 10
Prac
20
10
10
60
10
10
10
10
20
15
90
XX
Atty 10
Prac
10
15
10
10
10
80
10
10
5
100
60
XX
Atty 10
Prac
10
10
10
10
70
10
10
10
90
10
30
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
Cash Flow Budget –
When you expect to actually pay for it
 During what months do you the need the
most amount of cash, the least amount of
cash
 Will projected collections be enough to
cover your monthly “nut” or will you need
to draw down?

Cash Flow Budget
Ex
p
Jan
Feb
Mar
Apr
May Jun
Jul
Aug Sep
Oct
Nov Dec
Tot.
Lib
600
50
50
50
50
50
600
50
50
50
50
50
XX
OT
400
200
200
800
200
200
200
200
200
300
300
800
XX
Ins
Off
100
100
200
0
100
100
200
0
100
100
200
0
100
100
200
0
XX
Bo
n
0
0
0
0
0
900
0
0
0
200
0
0
0
200
0
XX
***
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
Financial Reporting

Monthly
– Income Statement (against budget)
– Balance Sheet
– Statement of Trust Balances
– Aged Accounts Receivable and Work
in Process Report
 By Client
 By Responsible Lawyer
 By Working Lawyer
– The End of Month Snapshot
Financial Reporting – Daily
Report
Month:
Date:
May
31-May
(does not include atty comp)
Totals
Cash on Hand
Today’s Receipts
12,000
6,000
Accounts Receivables
Work in Process
Total
Payables Due 15th
Payables Due 30th
Special Payables Due
Payroll Due (date)
Payroll Due (date)
6,456
16,123
5,000
7,500
7,500
Line of Credit Balance
0
Loans Payable Balance 90,000
Attorney Hours Posted
ABC
160
DEF
170
GHI
180
18,000
30 or less
60
90
120+
26,000
43,000
13,000
12,000
23,000
9,000
9,654
3,666
71,654
67,666
139,320
(42,579)
LOMAS
866-730-2020