【Hints to Law Firms】 Do not stinge on bank service fees, as small savings can lead to big losses anytime!
When law firms handle property transfer for clients, client will first deposit into the law firm’s Client Account at the bank, before being transferred to the buyer or payee.
Due to the needs, law firms often open accounts at multiple banks to handle the matters.
Each year law firm need to request Bank Confirmations from banks as supporting for accountant’s report filling.
Recently, the Bank Confirmation fee has risen from $150 to over $700, causing law firms to consider whether they still need to obtain confirmations from all the banks they work with.
● Saving the wrong way leads to big losses
However, there is no room for “consideration” when it comes to obtaining the Bank Confirmations. The Law society of Hong Kong has clear regulations requiring law firms to obtain all Bank Confirmations from the banks they use at the end of each year.
There have been cases where auditors told law firm clients that Bank Confirmations were not necessary if there were only a few active accounts at a bank, in order to save administrative costs. Fortunately, this misconception was cleared up in time, as otherwise the law firm’s license could have been revoked.
● Smart saving, zero risk
When we cannot change the environment, the best approach is to change ourselves. In the past, the Bank Confirmation fees were reasonable, so maintaining 10 or 8 bank accounts was not a problem and convenient for clients.
However as the fees have skyrocketed, firms naturally need to find ways to cut costs. “Large banks” are commonly used but charge high fees, while “smaller banks” are less popular but have cheaper fees – which option should be explored? It’s well known that opening company bank accounts is not easy, so it’s advisable to consult a professional accountant to analyze which accounts to keep or close, to avoid making regrettable mistakes.
Each industry has its unique business techniques. Consulting with “Maxi Solution Accounting,” an accounting company with over 20 years of experience, can help you avoid many pitfalls and facilitate the growth of your business.
“Maxi Solution Accounting” – an accounting partner that can help you prosper.
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