Updated: Aug 26
There is no doubt that technological advances can support the business to improve and gain competitive advantages in the market and law firms are no exception. Lawyers need to recognize the value of legal technology which in turn brings potential benefits for the firms. Therefore, with adequate legal accounting software, law firms can make an improvement in their processes, leading to the increased productivity, effectiveness, and profitability. The following are the top six reasons why your law firm needs legal accounting software:
Reason #1: Various types of reporting
Legal accounting software is beneficial for lawyers to generate various reports related to invoice payment information, profit generation, account receivable, trust account summaries, and related expenses. Moreover, law firms can gain a more detailed understanding of financial health and determine which areas are needed to improve.
Reason #2: The accuracy in Trust Accounting management
Trust accounting is considered as the main responsibility for Attorneys to ensure that all records are precise and true as well as in compliance with the state regulations and guides. The law firms have failed to comply with the trust account rules, leading to harsh penalties and serious issues with their clients. Thus, the effective accounting software will support gathering data, track client funds and all money transferred in and out of the trust accounts. The list of trust transactions by the client is also provided. In addition, the reconciliation is made between client trust account, client ledgers, and bank statement. A law firm can know how much they earn and avoid the issues of accounts being overdrawn.
Reason #3: Time tracking
Using the right legal accounting software will provide your law firm with the approaches to track the time accurately spent on client tasks. By employing the information, the firm leaders can determine the ineffectiveness and time-wasting activities in order to improve the firm performance. In addition, the firm can avoid the problems related to overbilling or underbilling for their clients.
Reason #4: Efficiency in invoicing process
The right legal accounting software gives the law firm the customization options to create the invoice in an accurate way and satisfy the firm’s requirements. The billing system is established to track time and expenses by each client’s case and service provided. Therefore, with efficient software, law firms can ensure accuracy and professionality in their invoicing process.
Reason #5: Effectiveness in tracking expenses
It is necessary for the firm to gain an in-depth understanding of where their money is used for the firm’s activities or the payments on behalf of their clients. With no right legal accounting software, law firms might face a number of problems such as missing receipts and inaccurate records in the ledger.
Reason #6: Legal Specifics
The legal accounting software is used to not only satisfy the firm accounting requirements with various advantages but also consist of the legal profession. Recording the accounting transactions for law firms in compliance with the state bar and other regulating agencies is the need. For example, Quickbooks is considered one of the most popular accounting software which can be customized to suit law firm usage. With Quickbooks, the trust accounts are categorized for each client so the firm can track all the activities related to the client and check the trust account balance.
Irvine Bookkeeping offers a full range of bookkeeping services and promises that in 2-3 weeks, we clean up a whole book for you to prepare for tax seasons. We believe knowing your company's financial health is the key to maintaining control of your business.
As a business owner, if you see that you cannot handle accounting on your own, consider hiring an accountancy service for contractors to help you with it.
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