How do I track clients with overdue balances?

CosmoLex Team

In a recent poll, small and solo attorneys named billing and collection matters as among the top three challenges in running a law firm. [1] Reports tracking clients with overdue balances, such as the aging accounts receivable report, are the starting point of all collection activities. [2] These reports allow law firms to print a list of past-due invoices for each client … Read More

What is in my law firm's profit and loss statement?

CosmoLex Team

A profit and loss statement (P&L), also known as an income statement, sets out the revenues earned and the expenses paid by a law firm during a specific period of time.[1] The statement also shows the firm’s profit, the “net income,” which is calculated by subtracting the expenses paid from the revenues earned. Since the net income appears on the … Read More

What is a profit and loss statement?

CosmoLex Team

A profit and loss statement (P&L), also known as an income statement, sets out the revenues earned and the expenses paid by a law firm during a specific period of time.[1] The statement also shows the firm’s profit, the “net income”, which is calculated by subtracting the expenses paid from the revenues earned. Since the net income appears on the … Read More

What is the general ledger?

CosmoLex Team

A general ledger is a grouping of all of the accounts that a law firm uses to categorize and track the firm’s business transactions.[1][2] The information found in the general ledger accounts is used to generate the firm’s balance sheet and profit and loss statement.[2] In the past, the general ledger was a book in which each account had its … Read More

What is the difference between cash-based and accrual-based accounting?

CosmoLex Team

The difference between cash-based and accrual-based accounting is one of timing.[1][2]In a cash-based accounting system, a law firm records income when it’s received and expenses when they are paid. In an accrual-based accounting system, a law firm records income when earned (invoiced) and expenses when incurred (upon receipt of the bill from the vendor). This means that in a cash-based … Read More