In my last article, I wrote about the basics of Iolta accounting. In future articles I will talk about different packages and how they handle Iolta accounting. But before you can evaluate software, you need to know what you are measuring. So, in this article, we will discuss features to consider when evaluating Iolta accounting. We will use these factors in comparing products.
When deciding what software to use an important decision is the operating environment. In this category there are two factors cloud vs premise and stand- alone vs integrated.
All software is either cloud based or premise based. While premise based software can be run in a hosted environment, gaining some of the benefits of cloud based software, it is still premise based. Factors to be considered here are:
- System Requirements
- Backup capability
- Access to data if discontinue product
- Program updates
The choice of stand-alone vs integrated software is “personal” and different for each firm. If the firm wants an integrated solution they need to determine what integration they are looking for. Iolta Accounting software may be integrated with billing software, general ledger programs or practice management software. It might have the capability to download transactions from the bank or it may allow for integration with a merchant account. Identifying your firm needs can help you make the right choice.
Features and reports are the other key area to evaluate. Features that may be needed include:
- Separate Iolta accounts for fees and expenses
- Iolta accounts at multiple banks or multiple accounts at a single bank
- Ability to automatically pay the bill from a specific Iolta account
- Security – limiting who can access information specific Iolta accounts or what functions individuals have access to
- Preventing over drafting of a client Iolta account
- Evergreen retainer – request replenishment of the retainer when it falls below a set level
- Bank reconciliation
- Ease of data entry
- Ability to hold Iolta funds for specific purpose
- Import / conversion capability if coming from other software
When it comes to reports there are a limited set of reports that are generally needed, but they are critical, especially if you have an audit by your Bar Association. The reports you may need / want include:
- Individual client ledgers – by account
- Client balances by Iolta account
- Bank reconciliation report
- Uncleared checks and deposits by client
- Three-way reconciliation report – showing balances by client tied to book balance and bank statement balance.
- Withdrawals to specific vendors by customer
- Withdrawals to pay firm
- Iolta balances relative to WIP
It may be important to get these reports not just as of today, but also as of a past date.
There are many choices, and no one solution that is right for every firm. By understanding what features are important to your firm, you can make a choice that will serve the firm for a long time.