Accounts Payable (AP) is the money your firm owes to others, including vendors, government agencies, and lienholders. It sounds simple, yet it all adds up to a situation that takes a lot of time and effort to manage. That’s why CosmoLex is built to do most of it for you…automatically.
Why is Accounts Payable So Complex?
To begin with, there are three basic types of accounts payable: general office bills, vendor bills to be billed to the client, and payments with 3rd-party liens. These accounts are recorded differently depending on whether your firm operates on a cash or accrual basis. Additionally, factor in legal-specific regulations governing these transactions, and you have more permutations. CosmoLex is specifically designed to handle these legal-specific accounts payable challenges with ease.
General Office Bills
The first thing to consider is timing. You may pay some bills early and take advantage of discounts. You want to pay some on time. You may even want to pay other bills late, knowing that the late payment fee is worth it from the perspective of your cash flow. All of these expenses owed must then be recorded correctly on the income statement. CosmoLex does this automatically, and can report on how much you spend with each vendor — you can use these to find discounts or better terms.
Bills from Vendors (Passed to the Client)
This type of accounts payable is even more complex. You need a system that can do these 3 things:
Link each vendor bill to the correct client matter (or multiple matters)
Hold certain payments until the client’s payment is received
Differentiate between invoices for client expenses and for the firm’s expenses
CosmoLex does this for you automatically. It can even remove the hold automatically, once your firm has been reimbursed. Nothing slips through the cracks and compliance is assured.
Matter Bills with Third Party Liens
There is an obligation to not only pay these bills but to do so at the lowest cost to the client. You need to know when money has been received to cover these expenses and that these funds are used to pay third-party claims before your firm is paid for its services. All of this requires the “total view” that you can only get from CosmoLex — a fully integrated system, built-from-the-ground-up to handle the precise needs of law practices. Learn more about third-party lien claims