While law firm finance and technology decision-makers may not be engaging in international trade, they are under increasing pressure to support their firms' growth plans, which often include expansion globally.

The current Harvard Business School MBA Program offers a course titled "International Financial Management" that provides a framework for understanding how cross-border financing and investment decisions are influenced by a variety of factors including exchange rates, international tax considerations and country risk.

While this short primer will not qualify you for an Ivy League MBA (besides, you may already have one!), it will help you better understand the functional, technology and implementation considerations for a global financial management system.  Global may sound like a broad term, best describing the largest of multinational law practices; however, an increasing number of smaller and mid-size firms are faced with tackling international issues and contending with financial management requirements and rules across borders.
 
When firms are rolling out their financial management solution across multiple geographies, those responsible for the strategic results need to work hand-in-hand with the tacticians on a united implementation and roll-out plan. Specifically, the team must do its homework when it comes to understanding statutory compliance issues, reviewing local customs and practices, being informed on legal entity setup and ownership requirements, and taking into account the inherent challenges of dealing in multiple languages and currencies.

Functional Requirements for Global Systems
When law firms research integrated global financial management systems, there are certain unique functional requirements to consider.  At the top of the feature list is the ability to support multiple currencies.  Firms should be able to bill, receive funds, pay invoices and report in any local currency as well as properly account for exchange rate and currency value fluctuations.

Equally important is the ability to support multiple charts of accounts within the general ledger.  Multiple charts of accounts allow each international office to conduct business as required - operating under different year-ends, transacting and reporting in different currencies, meeting local statutory requirements and more - while still providing accurate firmwide visibility.

When it comes to billing, a global financial management system should be able to accommodate a multitude of unique billing options, such as billing in local currencies, management of local taxes, support for specific bill formats and layouts and adherence to LEDES e-billing requirements.  Finally, firms must also be able to handle client funds, commonly known as trust accounting, which might require firms to make procedural changes, such as how bills may be settled by client funds, or the addition of statutory reporting capabilities.

Local Compliance Issues
The right functionality, however, is only part of the total solution.  A global financial management system must also enable firms to comply with local statutory requirements, such as establishing a separate general ledger chart of accounts for local transactions; setting up new reporting layouts and auditing processes; using a specific accounting method, such as cash or accrual; operating on a specific accounting year-end; meeting trust accounting requirements; and more.  Beyond this, some countries will mandate exchange rates and require your accounting systems to be locally certified.  These statutory requirements vary considerably by country, so firms should work closely with local experts to ensure compliance.

Firms must also properly configure tax management within their financial management system to support local codes and jurisdictions as well as properly calculate and report on taxes.  In addition, firms must clearly understand how local requirements will affect other system functions, such as bill formats and information presentation.

The Right Stuff for Going Global
Three key areas will determine your success when implementing a new global financial management system or extending an existing system internationally.

First, having the right people - with the right mix of skills and experience - is the single most important aspect of a successful global implementation.  Firms need system and technical experts who understand the application and how it functions.  They need specialists who are not only fully-versed in local statutory requirements, but also understand the impact those requirements will have on the system configuration and implementation.  Finally, firms need experienced project managers who can successfully plan, execute and manage a global system implementation.

Second, the right implementation process should be developed by experienced project managers, whether found internally, sourced from the software vendor or a third-party consultant.  The largest component of the process is the project plan, which clearly defines the overall scope of the work at hand and identifies specific tasks and activities.  Other plan aspects include an implementation timeline and a breakdown of required resources and skill sets.  Having the right people available at the right time can make or break an implementation project.

Third, firms should ensure their underlying technology infrastructure can meet their global requirements and growth targets.  Typically, this means having a technology architecture that is not only scalable, but that is also flexible enough to accommodate global requirements.

While the technology you have in place to support your globalization is critical, so, too, is your knowledge of countries' statutory requirements and global features your users need to perform their client work.  It's a good idea to establish an overall implementation process that positions the most qualified and experienced people to execute your rollout in a cost-effective and timely matter.

About our author :: :: ::

Andrew Dawson has more than 20 years of experience in the legal industry.  As the Senior Director of Product Marketing for ADERANT, Andrew leverages his exposure to a wide range of functions within law firms to provide technical business expertise and insight.  Andrew holds a Bachelor of Science Advanced Degree from the University of Saskatchewan.  He can be reached at andrew.dawson@aderant.com.