Three-way reconciliation reports are required by most state trust account regulations. Not only that but they are simply a good idea, allowing administrators to be sure that all funds in a trust are accounted for. There are many ways to generate these reports and we’ll look at three: manual reports, non-trust software, and legal accounting software.
Computers haven’t been around as long as trust accounts have. With no legal billing and accounting software at their disposal, attorneys used to have to hire accountants to generate three-way reconciliations manually. Believe it or not, some still do this, or even try to generate the reports themselves.
If you have a small practice and never handle more than one or two trust accounts at a time this might seem like a reasonable option. However three-way reconciliations are confusing, especially if you don’t have a financial background. Trying to track and document every transaction is difficult and is going to take hours of your time better spent on practicing law. Most important, manual reconciliations have high error rates and those errors will get you into trouble
Non-Trust Financial Tools
In the early days of office computers, trust administrators had limited options for three-way reconciliations. Long before Excel was even a gleam in Microsoft’s eye, accountants used VisiCalc, the first spreadsheet program, to generate these reports. Attorneys have also tried creating custom reports in generic financial software with limited success. While these methods at least let the computer do the calculations, speeding up report generation and reducing the chance of errors, it’s still not a practical solution.
Dedicated Escrow Software
The best option is to use law practice management software that includes trust management tools, software like CosmoLex. How easy is it to generate a three-way reconciliation report? This easy:
- Click “Reports” along the top.
- Click “Banking” along the left side, and then “Three-Way Reconciliation Report” from the menu revealed.
- Select the trust bank account, the reconciliation statement, and a sort option.
- Click the “Generate” button
- Save the PDF file generated.
That’s all there is! It takes seconds and you have a compliance-ready report that will please any client or auditor. You can print it, email it, or simply store it for future reference.
Explore CosmoLex for yourself and you’ll see it gives all the tools the modern law practice needs.