You probably didn’t take any accounting classes in law school, but if you’re running a solo or small law firm, you’ll get plenty of practice crunching numbers and dealing with the ins and outs of accounting processes.  

Effective accounting is an essential operational task in a law firm. With reliable processes in place, you can increase your profitability and client satisfaction without taking away from your billable hours.  

But therein lies the challenge: getting your accounting processes right takes time, and the last thing you want to do is spend tons of time getting your accounting work right when you need to focus on your clients. 

To give busy legal professionals an edge in accounting, we’ve compiled this list of the six accounting practices of highly successful attorneys. 

1. Make time and expense tracking a habit

One of the most critical components of managing your accounting processes is tracking your time and expenses wholly and accurately. Many legal professionals wait until the end of the work week to input their billable hours, which can lead to lost time—or worse, billing errors that can damage client relationships. 

Good time- and expense-tracking habits benefit your law firm in a multitude of ways. They help your firm:  

• Establish accurate matter budgets (more on that below) 
• Create clear and transparent invoices for clients  
• Analyze utilization rates for attorneys and legal staff 
• Safeguard against client complaints and potential ethical violations 

Time tracking has another benefit: helping attorneys understand how they are spending their time. Yes, this supports a profitable and efficient business operation. But time tracking also helps attorneys manage their time—and even protect against burnout. For example, analyzing time reports can identify overworked team members, which can in turn, identify opportunities to delegate or shift tasks.  

2. Build solid trust accounting processes 

If your firm is working with clients with retainers, your trust accounting processes must comply with all legal regulations that apply to your practice. But trust accounting is often easier said than done.  

If you’re not feeling solid on your trust accounting processes, or it’s been a while since you established them, block out some time to review how your practice handles trust accounts. Do your procedures meet your state bar requirements? Do your trust accounting agreements still pass muster? Are there any areas where staff members experience bottlenecks or issues when managing trust accounts?  

3. Offer online payments 

Chasing down clients for payment or waiting for checks to clear with the bank can be a hassle, and it can also make your accounting processes more complicated than they need to be. Instead of keeping track of paper receipts and invoices to manage your accounts, consider offering online payment options. 

Not only do online payments make it easier for you to streamline your accounting processes, but they also have the added benefit of being convenient for your clients, and they get you paid faster. 

If you decide to opt for an online payment solution, be sure to select software that is certified to the highest industry standards and comes with regulatory licenses to guarantee compliance. 

4. Save yourself time and stress with automated invoicing and billing

When it comes to invoicing and billing, lacking a set of processes can not only impact your bottom line, it can make your job harder when it comes to receiving prompt payment from customers, and eat into valuable time that could be spent helping your clients.  

Creating efficiencies in your invoicing and billing processes will go a long way to making your job easier. Consider the following ways to streamline invoicing and billing: 

• Create repeatable invoice templates 
• Batch processing invoices to automate invoice creation 
• Set up a user-friendly client portal with access to online payment  
• Allow clients to set up automated payments 

5. Keep on track with matter budgets 

Creating and following budgets for your matters is an essential component of effective accounting for your law firm. By setting target budgets for each matter, your firm can anticipate revenue, allocate the proper resources, and monitor expenses.   

While creating an effective budget can sometimes feel like a guessing game, you likely already have much of the data you need, thanks to your time and expense tracking. But don’t forget to factor in costs that might not be in your practice management software, like:  

• Overhead costs 
• Staff salaries 
• Unexpected expenses 
• Profit margin 

Be mindful of the fact that matter budgets may change over time, so make it a practice to regularly assess whether your matter budgets align with actual costs.  

6. Review the numbers regularly 

Speaking of regular reviews, no discussion of accounting practices would be complete without talking about the value of regular reviews.  

Taking the time to sit down and assess where you’re nailing your budget and where you’re falling short of expectations will help you dial in budgets for future matters, and ensure that you’re staying profitable. 

If you want access to actionable information for future budgeting, choose a software solution that provides all of the tools mentioned above to clearly show how much time and money you’re spending on every matter. This approach allows you to make data-driven decisions in the future. 

Ready to handle accounting processes like a pro? 

Whether you’re a solo practitioner or running a small law firm, CosmoLex has the tools you need to create top-notch accounting processes to help your firm grow. From time and expense tracking to detailed analytics and trust accounting solutions, we’ve got you covered. 

Ready to make the switch? Start a 10-day free trial of CosmoLex or schedule a personalized demo now.