Review your firm’s trust bookkeeping procedures and identify which procedures are managed manually. Often law firms enter each client’s transactions separately and issue trust checks manually. Manual bookkeeping is the root of several problem areas. Not only are manual processes time-consuming, but mistakes are difficult to detect and reports are next to impossible to prepare.
Good trust software for attorneys can easily replace ALL your manual bookkeeping tasks and provide you with total control of your trust accounting. You will:
Don’t rush to embrace the first accounting program you find to manage your trust books. Many accounting packages that work very well for general operating accounts lack features that trust accounting requires. For example, general accounting packages typically do not produce client ledgers easily and do not prevent trust accounting mistakes from occurring. There is typically no audit trail log and one can even go back to reconciled months and edit prior transactions. That’s not proper trust accounting! When you evaluate your trust program choices, consider the following questions:
A client trust bank account is a special kind of account. Today, many banks offer a particular type of trust account with separate sub-accounts for each client.
A bank account that allows you to manage individual client funds separately provides a double layer of protection for your firm because a bank can also alert you to any client ledger overdraft situation. Additionally, you will receive monthly client ledger trial balances from the bank, which you can then match with your office client ledger records.
When a client matter has been completed, the balance on the client’s ledger is zero, and all transactions have been reconciled with the bank statement, you should “close” or archive that client ledger. Otherwise, over a period of time, you will be dealing with hundreds or even thousands of “open” client ledgers.
While a computer or software can be replaced, lost data is not easy to re-create. For trust accounts, always maintain a hard copy of each client ledger on a monthly basis. Make regular backup copies of your trust database files and store them at a remote location. Consider using cloud-based IOLTA software that includes automatic backups.
Managing trust accounts is easier than you think. Start with a careful review of your firm’s trust accounting processes. Begin using trust account software designed to help you comply with state regulations. Remember, a client A’s money has nothing to do with client B’s money. Your trust books should only contain open accounts. Make an iron clad rule to backup copies of data files and store them in a secure and separate place. Follow these tips and you will bring order to your trust bookkeeping, tighten controls and no longer worry whether or not you are in full compliance with state regulations.
About Us: CosmoLex is a leader in cloud-based software for lawyers. Our CEO, Dr. Rick Kabra, has worked for many years in the legal software industry, catering to the specialized technology needs of small to medium law firms. Learn more about our law office management software by emailing firstname.lastname@example.org or calling (866) 878-6798.