CosmoLex Trust Accounting is Anything but Basic

Have you learnt the biggest supply of shopper complaints about attorneys? Communication—unreturned calls, unanswered emails, and so on. The second largest supply of complaints? Cash. Extra particularly, how attorneys deal with their purchasers’ funds.

Legislation Agency Accounting Complexities

Accounting performs a necessary function in any enterprise. Regardless of the trade, a enterprise tracks revenue and loss, tax occasions, and different monetary measurements. Legislation companies do all of that whereas additionally exactly accounting for receipts and disbursements on a per-matter foundation.

In some respects, belief accounting—monitoring the funds we obtain from or on behalf of purchasers, however haven’t earned for ourselves but—is simpler than customary enterprise accounting:

We don’t have to observe revenue or loss;

We don’t file depreciation of bodily belongings or amortization of intangible belongings; and

We don’t fear about curiosity earned or tax occasions.

If legislation companies solely needed to fear about their belief account (additionally referred to as an IOLTA, IOLA, or escrow account, relying in your jurisdiction), they may have it simpler than a generic enterprise or non-profit. Sadly, a lawyer’s belief account burdens exist along with basic enterprise accounting necessities.

Software program Simplifies the Scenario

Happily, the extra wants of belief accounting match what computer systems are good at:

Tacking shopper funds on a per-matter foundation;

Matching every receipt or disbursement to supporting paperwork; and

Painlessly reconciling numbers between the agency’s digital ledger, the financial institution’s reported quantities, and the belief balances for every matter.

Basic goal accounting can do some, however not all, of this. Perhaps it might maintain “audit-important” documentation and reconcile between itself and the financial institution, however it lacks the core instruments attorneys want. In the identical means companies profit from legislation follow administration software program to maintain issues organized, companies want accounting software program that understands belief accounts, issues, and their distinctive roles in authorized.

The proper legal-specific accounting software program alleviates a lot of the stress.

CosmoLex’s sturdy, approachable belief accounting makes it simple to file and report your belief account exercise correctly.

Leverage Instruments to Do it Proper the First Time

The cash-centric shopper and disciplinary complaints talked about above don’t stem from lawyer malfeasance. Most disciplinary complaints outcome not from deliberate misappropriation however from negligence. An answer, like CosmoLex, that encourages (and may compel) good recordkeeping, promotes compliance and prevents issues.

In case your agency depends on a “basic goal” accounting program and a separate matter administration program for case data and billing, that cut up introduces pointless problems. Utilizing separate applications creates a spot for human error to seep in. If you happen to keep each an digital and paper calendar, and so they disagree, you lose time figuring out which is appropriate. Equally, nobody ought to play a “monetary phone” sport, relaying numbers between merchandise and hoping no errors come up.

CosmoLex gives follow administration and full, basic ledger accounting in a single place. Handle case particulars, invoice purchasers, and monitor and reconcile enterprise and belief accounts in a single web-based, mobile-friendly product.

Beneath that single-source umbrella, CosmoLex:

Collects all mandatory transaction reference data in an audit-ready trend;

Separates belief account cash and transaction exercise by matter and shopper, stopping commingling of various purchasers’ funds;

Helps computer-printed checks to forestall duplicative verify numbers or writing checks from the flawed account;

Guards in opposition to overdrawing not solely the general belief account, but in addition overdrawing any particular person matter’s belief steadiness;

Permits you to “shut the books” on a matter or time interval to forestall additional edits or alterations; and

Connects to your financial institution or monetary establishment to instantly import transaction information so that you can evaluate and ensure.

Shortly Run Reviews to Confirm Accuracy and Completeness

Significant, actionable studies start with good information. High quality studies depend on high quality bookkeeping. CosmoLex produces studies that hold you knowledgeable and compliant with jurisdictional obligations. Core, insightful studies embrace:

Belief Ledger Stability Report: This report, recognized to Canadian practitioners as a Belief Itemizing, reveals belief balances for every shopper by matter, the final date of any exercise, and whether or not the matter is open or closed.

Consumer Belief Ledger: This report is a mini financial institution assertion for every matter. It reveals credit and debits for the matter, full with a operating steadiness. If in case you have a single matter’s funds in a number of belief accounts, it additionally accommodates that variation.

Reconciliation Report: This report compares the financial institution’s ending steadiness to your recorded ending steadiness. It additionally reveals uncleared transactions, similar to uncashed checks.

3-Manner Reconciliation Report: This report builds upon the reconciliation report, exhibiting the financial institution’s numbers, your belief account’s total numbers, and shopper ledger numbers. 3-way reconciliation studies be sure that financial institution totals match belief account totals and that each totals agree with what matter-level ledgers report. Auditors love this report.

Finest Practices Produce the Finest Outcomes

The basics drive stress-free belief accounting.

Run the studies month-to-month and act on points. Closed issues shouldn’t have belief balances. Examine dormant accounts and uncashed checks. Relocate unassigned funds to their correct matter.

Know your audit necessities.

Hold data, together with copies of deposit slips, canceled checks, and statements, for the related time interval.

Make accounting extra easy by doing the appropriate factor promptly with quick access to related, verified monetary data. CosmoLex helps your agency’s belief accounting hold the right data, meet jurisdictional and audit necessities, and usually run easily. Be taught extra and schedule a demo at CosmoLex’s web site.

Final up to date February 1st, 2024