If you’re looking to simplify and improve your legal accounting in 2019, there’s still plenty of time to commit to resolutions to make it happen. Five resolutions, in particular, will help you take charge of your accounting, avoid improper accounting and streamline your processes. Putting these changes into place and adding in integrated accounting can completely change how you view your firm’s accounting process.
For most lawyers, legal accounting is their least favorite part of running a law firm. The three primary parts involved – business accounting, fee advances/retainer accounting, and matter cost accounting – all come with the potential for errors if not handled properly. Legal-specific rules and regulations, as well as the risk of ethics violations, abound especially when dealing with retainer accounting and trust accounts.
You can make accounting less of a headache and get peace of mind that your books are being handled correctly with these five resolutions:
- Reduce double data entry. When you use separate programs for accounting and billing, this means you need to enter data into two different locations. Double entry not only takes up more time that could be devoted instead to billable hours, but it also means a higher likelihood that something is going to be entered incorrectly. If these mistakes aren’t caught early on, they can be time-consuming and costly to fix.
- Ensure proper handling of client funds. One of the primary tenets in the practice of law is making sure every penny of client funds are handled properly. As the fiduciary of these funds, you need to make sure you’re following all the rules and regulation surrounding trust accounts. It can seem daunting to remember them all, so consider using a legal-specific accounting software solution with built-in features meant to address the requirements of trust accounts is an option to help make sure you stay compliant.
- Increase client cost recovery. Don’t miss out on income. Be sure to record expenses and billable time as they occur. Client costs also need to be recorded promptly and properly designated as either soft/indirect costs or hard/direct costs.
- Track income in detail. Tracking income by practice area, client and matter will give you valuable data to base your business decisions off of, including identifying areas for growth and cutbacks.
- Gain tight control over credit card payment process. Credit card processors aren’t all created the same when it comes to law firms. There are specific requirements as to how to funds must be deposited to avoid commingling. Ask very specific questions of your credit card processor to make sure credit card payments are being handled correctly. You can learn more about this in A Look at Accepting Credit Card Payments in Law Firms.
Connecting the gap between your billing and accounting will help make sure you stick to these resolutions. A solution like CosmoLex that puts both accounting and billing into one legal-specific program eliminates the need to enter data into two systems and addresses all of the unique requirements of legal accounting. With the right tool that also includes practice management, you’ll be able to enter time and expenses as they happen and access built-in reports and data to help you track income.
Proper accounting is directly correlated to a firm’s success. It’ a task many don’t enjoy, but committing to these resolutions will make increase your firm’s profits and make sure you’re compliant. By using a program that offers both billing and accounting and making some tweaks to your accounting processes, your firm can get a new start in 2019 toward a more positive accounting experience.