The time you spend on billing and accounting can seem like a money-making investment – after all, it means you’re going to invoice your client for billable hours and hopefully recover some expense costs. But effective time usage is what allows lawyers to invest their time in activities that are profitable, rather than just those that simply need to be completed. The same goes for law firm staff as well – efficiency is a benefit firm-wide.
Accounting and billing are at the heart of keeping the doors open and the lights on. But that doesn’t mean you need to use two separate programs to manage them. In fact, by doing that you’re doing yourself, and your firm, a disservice.
Using a combined accounting and billing program will save you time and money, prevent headaches from constantly fixing errors, and spare you from avoidable compliance violations.
If you’re using separate programs, here’s how you’re wasting precious time:
1. Duplicate data entry
Using two systems requires two entries – which means it takes twice as long. With clients, cases, and possibly staff to manage, you’ve got enough on your plate. If you can cut your task time into half, it’s usually a good idea.
The other issue with duplicate data entry: the increased likelihood of entry mistakes.
This also means you’re going to be spending a lot of time switching back and forth between programs. To think of just how much time you stand to save, take retainer management for example. There are a lot of tasks that come along with retainer management that would mean you’re going to have to make different entries in each system like:
- Deposit of funds into the trust account
- Issuing payments to the firm for earned fees
- Keeping track of retainer balances and unpaid billing balances
Having this information in two separate systems means it always needs to be correct in both places.
2. Error-prone reconciliations
Regular reconciliations are a requirement for law firms, and how much you grow to dislike them will likely be tied to how much time you spend fixing them. If mistakes are made during the data entry portion, then there’s no way your reconciliation amounts will be equal. Instead, you’ll wind up having to backtrack through your entries to find the mistake.
Even if the entries were made accurately, you can also experience data syncing issues between the two programs. Online payments can also trip up reconciliations, especially when the accounting system can’t tell which invoices are paid.
If you have a bookkeeper, these mistakes are going to mean they’re spending more time on them – costing you more money. And the same goes for syncing issues. You’re going to wind up having to take the time to fix it yourself or pay an IT consultant or company to take a look.
3. Cumbersome workarounds
Separate accounting and billing programs are common if you’re not using a system that’s designed especially for law firms. This means you’re going to wind up having to create workarounds to get them to handle your needs, like tracking individual client ledgers and running the required reports.
Matter cost tracking can also be challenging, with direct and indirect cost reimbursements requiring you to manually account for each one. A lot of firms find themselves dealing with inflated revenue as a result, because of the challenge of allocating items as income or as recovered costs – another time-suck for lawyers and their staff.
4. Lack of trust accounting compliance
Separate programs often lack any type of compliance protection. You need to be aware of trust accounting rules, but it’s helpful to have a backup in place that will prevent accidental violations.
There are also a large number of required reports that come along with trust account maintenance. Creating them can take hours if you’re doing it with separate systems, particularly if they don’t have a built-in component to create them. This is also part of the “cumbersome workarounds” we talked about – if you want to do them then you’ll have to figure out a way to do it manually pulling from multiple reports, even if it’s time-consuming.
Combined accounting and billing, especially legal-specific programs, will help to prevent you from making trust accounting mistakes. For example, with QuickBooksTM client trust funds could be posted incorrectly to any account. A combined, legal-specific program will block the transaction from occurring unless it’s placed into the appropriate – and compliant – account.
5. Separation of legal billing records
Not keeping your accounting and billing programs in sync can cause a whole bout of complications, leading to billing issues, missed revenue and potential violations. You need to be able to see your data in a singular system to get a full picture of your firm’s productivity and profitability in order to stay up-to-date on where your firm stands.
These separate records can also make it difficult to track:
- Client retainers and advances
- Disbursements and collections
- Invoices that have been from trust accounts
- Tying payments to the correct client matter account
Seeing a clear overview of your firm’s financial health in one dashboard is the best way to make sure you’re on top of the day to day and the long-term outlook. Otherwise, you’re going to have to waste your time trying to pull together an idea of where things stand by hopping between two programs.
Save time with combined accounting and billing
With your accounting and billing in one place, you’ll be able to spend less time on data entry and more time on the tasks that are going to bring in revenue. With compliance reassurances and a comprehensive overview of all your financial data, combined systems can help your firm mitigate trust accounting errors and stay on top of your firm’s trends and growth. To make the most of your time, look into another option if you have separate accounting and billing programs.