We are pleased to introduce Citi Private Bank’s 2021 Treasury Management Benchmarking Survey report for law firms.

The online survey was conducted between August and October of 2021, with the aim of understanding law firms' treasury management, working capital and collections management practices.

The survey included questions on a range of topics relating to treasury processes, including: payments, collections, cash application and reconciliation, as well as treasury management strategy and policies.

It drew responses from directors of finance, chief financial officers, and senior treasury executives from over 40 leading global law firms.

• 78% of respondents from Am Law 100 firms
• 35% of respondents from firms with gross revenue of over $1 billion, 13% between $500 million and $999 million, and 51% of between $150 million and $499 million
• 76% of respondents from firms with international offices

With digital transformation driving innovations in treasury management, treasurers must evolve and adapt to optimize operations. The 2021 report for law firms provides insights into firms’ performance relative to peers in the industry and helps assess the effectiveness of treasury, working capital and risk management practices.

Based on the responses, there is ample opportunity to introduce more efficiency into law firms’ treasury operations, including payments and collections, cash flow forecasting, and cash application and reconciliation. A continued effort to introduce technology innovations could change the treasury management landscape within the legal industry.

Key insights

Paper-based, manual processes persist at many firms

• 21% of firms are still using checks for more than half of all payments, and 31% report using checks for between 25-50% of payments
• The cash application process continues to be a predominantly manual effort; over 62% of firms report a manual cash application process, while only 3% employ a fully automated process
• Only 6% of firms report complete integration between their treasury management system and banking partner

Treasury operations are re-examining processes with a focus on automation, policy creation and better use of existing resources

• 75% of respondents reviewed payment processes and practices within the past year to optimize float and cost
• The effort to shift to electronic payment methods is reflected in the 8% of firms reporting that more than 95% of payments are made via ACH¹; almost half of all firms surveyed report utilizing ACH for at least 50% of payments
• Firms are invoicing their clients through email or an integrated platform technology more than through mail, contributing to a more efficient receivable process
• Documented treasury policies are in place at 45% of firms surveyed. 61% of firms have a Business Continuity Plan (BCP) in place and 32% of firms have updated their BCP within the past twelve months

The varying degree to which firms have adopted automation in their treasury operations is reflected in the gap between firms on certain metrics

• Days Sales Outstanding (DSO) varied dramatically among the respondents, ranging from a low of 20 days to a high of 165 days, with an average reported DSO of 82.1 days.
• Over half of firms surveyed report that 95% or more of their reconciliation process is manual. However, 46% of respondents employ reconciliation processes that are 95% or more automated, revealing a divide among firms in the adoption of straight-through processing for reconciliation

For more information, or to access the full report, please contact your Private Banker or Treasury Management Specialist.