Most small businesses use credit cards. Using a credit card for your business is far easier than cutting a check every time your business needs to make a purchase. For law firms, credit cards can be used for a number of things; phone bills, meals, client entertainment, travel, and even parking. Credit cards become an even more attractive option when you think of the rewards points, cash back, and additional benefits your firm could enjoy.
The Problem(s) With Law Firms Using Credit Cards
If credit cards are easy to use and provide additional benefits to a law firm, then why are so many firms reluctant to use them? Well, the truth is many law firms aren’t expert book keepers, and a few problems can manifest in those sloppy books.
Sloppy bookkeeping can lead to a few problems that make the use of credit cards less than ideal for law firms. Here they are:
Entering the full balance of a single statement as one item- All too often a law firm will receive their credit card statement and enter all of the month’s purchases as one item. This means one single line item could include a number of different purchases and expenses that should be itemized.
Manual Entry- In situations where law firms are trying to keep their books clean, they need to manually enter all of their charges. This can cause problems, because as humans we are are susceptible to making mistakes. This means that charges may not be accurately itemized and could lead to problems inside your firm and with the IRS.
Client costs are not attached to a matter- When lawyers use a credit card for parking or travel, these costs need to be billed to the client. Unfortunately if these costs are incurred on the 1st of the month and a credit card statement is received a month later, it’s all too easy to forget about these costs. This results in leakage by the firm not billing the client and essentially losing money.
Import Credit Card Statements Into CosmoLex For Credit Card Success
With the problems listed above it’s understandable why some law firms may be reluctant to use credit cards despite the benefits associated with them. But with practice management technology like CosmoLex, law firm’s can be assured that they are effectively and efficiently managing their credit card finances by importing their statements.
CosmoLex’s simple import function allows you to import your monthly credit card statements. Once the statement has been imported, CosmoLex will automatically itemize your charges and begin to learn how to categorize them over time.
In addition to CosmoLex’s ability to itemize and categorize your credit card charges. Client costs are automatically imported into a billing system and attached to a matter. This means your firm will reduce leakage and make sure you are charging your clients for the expenses they are responsible for.