Bank Data Feeds & Daily Reconciliations
Whether you like it or not (it’s highly likely you don’t like it), managing your firm’s legal accounting is a major part of running a law firm. Attorneys who enjoy managing their firm’s legal accounting are few and far between. It’s probably even more difficult to find an attorney who gets excited about performing daily bank reconciliations.
Why Your Firm Should Perform Daily Bank Reconciliations
In order for your firm to effectively manage it’s legal accounting, it is necessary to perform daily bank reconciliations. Performing these reconciliations on a monthly basis is better than not performing them at all, but it still isn’t enough and here’s why:
Your Trust Accounts. This is one of the most heavily scrutinized areas of your accounting and even your firm. The problem is, it doesn’t take much to throw your trust accounts into complete disarray. As an example, an unauthorized check that clears on the first of the month could go an entire 30 days without being noticed. By the time you see any inaccuracies at the end of the month it could very well be too late and your firm will be facing compliance issues and ethics violations.
Nobody’s Perfect. You make mistakes right? So do banks. Nobody can ever claim to be error proof or mistake-free. Entering a transaction into your books for one amount while the check was for written another, could go undetected for a long period of time. Tracking these mistakes down as they occur is much more effective than waiting until the end of the month.
Overdrafts Are Far More Costly Than A $30 Fee. Bounced checks or an unexpected check clearing could mean that you are no longer maintaining a positive balance in your trust account. This can result in ethics violations and compliance issues.
Daily Reconciliations May Be Required. Depending on the practice area you may be required to perform daily reconciliations. Lawyers handling real estate settlements are often required to do so.
Make The Daily Reconciliation Process Easier With Bank Data Feeds
While it is advised that your firm perform daily bank reconciliations, it certainly isn’t easy. Fortunately using the right technology your firm can make it easier. Firms can use bank data feeds and legal accounting software that allows them to be easily integrated to automatically notify you when a check or deposit has cleared. From there it’s just a matter of making a daily routine of reviewing all cleared transactions.
While this will certainly make the daily reconciliation process easier, errors can still occur. Your firm still needs to keep the following in mind:
- Different banks use different data formats. You need to employ legal accounting software that supports your bank’s format.
- Duplicate data entries can still occur.
- Transaction dates don’t always match up.
- Relying solely on bank data feeds could lead to your firm not accounting for transactions that have yet to clear.
Register For Our Webinar on The Daily Reconciliation Process
There is so much to the daily reconciliation process and the tools your firm can use to increase the ease with which you can perform this important task. Join us for our complimentary webinar, “Law Firms Need A Daily Bank Reconciliation. Really” to learn how you can use tools like bank data feeds to reconcile your bank accounts on a daily basis.
For mor detailed information on this topic, read our whitepaper, “Mastering The Reconciliation Process With Accounting Software & Bank Data Feed”.