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Bank Account Reconciliation Can Be Easy & Accurate

Ask any firm what one of the most important accounting activities is for them and they will tell you the bank reconciliation process. While they answer the question you might catch them rolling their eyes or shaking their head, because while bank reconciliation is important, it is also one of the most dreaded legal accounting activities for law firms.

Why is bank reconciliation important to law firms?

The bank reconciliation process is important to law firms for a number of reasons, but first and foremost it is required. In most states it is required that you reconcile your bank accounts every 30-60 days. Failure to do so will result in your firm falling out of compliance and quite possibly being disbarred.

Other reasons to reconcile your bank accounts include catching your own mistakes but also catching the bank’s mistakes. It certainly isn’t unheard of that either you or your bank erroneously enter data and create banking errors. This can negatively affect your revenue and once again bring about compliance issues.

Why is the bank reconciliation process such a problem for law firms?

The importance of monthly bank account reconciliation cannot be downplayed, but it would be disingenuous to say that this extremely necessary legal accounting process isn’t a problem area for many law firms. With multiple bank accounts and multiple statements, comparing and aligning balances can not only be extremely time consuming, but the manual process is extremely error prone. Some law firms even opt to put the process off for months at a time only to hope that it won’t negatively affect them. Unfortunately kicking the can down the road will only result in an even more complicated reconciliation when your firm is facing dreaded legal accounting audit.

Simplify the reconciliation process while reducing errors with automation.

While the monthly reconciliation process has proved to be a pain point for firms for quite some time, practice management technology like CosmoLex has made the process a non issue. Firm’s can simply load electronic bank statements and the practice management system will match deposits and disbursements based on predefined rules.

CosmoLex effectively turns the time draining error riddled process of reconciling your accounts into a few clicks that produce an error free reconciliation. See for yourself with a free trial of CosmoLex.

Rick Kabra

Dr. Rick Kabra is CEO of CosmoLex Cloud, creator of cutting-edge technology solutions to help solo and small law firms law firms. Rick has a Ph.D. in Electrical Engineering from NJIT and has over 10 years of experience in the legal software industry catering to the specialized technology needs of small to mid-sized law firms. Rick has given numerous seminars and published articles on legal technologies such as law practice technology management, cloud computing, and legal billing, business & trust accounting compliance.