Getting the Best Law Firms Accounting Software
While honing your skills to grow into a successful attorney has taken years, law school didn’t teach you about bookkeeping and accounting for lawyers. As a result, even seasoned practitioners find the thought of legal bookkeeping and law firm accounting pretty intimidating.
Still, your law practice is a business at its core. Therefore, you must track your finances by performing general bookkeeping functions. You definitely have an accounting strategy for your company, but how effective is it?
If you still handle your practice’s accounting needs using discordant out-of-the-box billing software or paper systems, you could be limiting your company in terms of productivity. The best way to go about this is using law firm accounting software.
Some practitioners may think this is an unnecessary expense. However, this is typically something your organization can’t afford to run without.
Why Do You Need an Accounting Software for Your Law Firm?
“It’s important to maintain proper books of account for your law firm.” This is an obvious statement, yet quite nebulous. You understand the importance of law firm accounting, but do you know why you should be concerned and how much? Well, as the firm owner, you should be concerned about legal bookkeeping and accounting a lot.
Sound legal bookkeeping helps you maintain complete, accurate, and up-to-date financial statements. What’s more, it offers a rich financial picture and helps your company meet obligations to your organizational goals, customers, and the state bar.
Legal accounting aids the collection and evaluation of critical information. This lets you come up with data-driven decisions based on the money that enters and exits the firm. Thus, you can’t miss out on revenue, and the data will help you identify the most and least successful business growth elements.
It also helps you maintain a great repute in a practice where reputation is everything. Accounting mistakes look unprofessional and can threaten your company’s finances and compliance. Legal accounting software avoids this and can help retain clients, boost referrals, and identify growth opportunities.
Types of Law Firm Accounting Software
When looking for reliable legal practice accounting software, you must understand the available options. Most of the time, “law firm accounting” is used inaccurately to refer to trust and billing features. But most lack the traditional fundamentals of accounting software that you may require.
For clarity, always remember that legal accounting software is classified into the following three classes:
- Dedicated law firm accounting software
- Practice management and accounting software
- Pure accounting software, typically industry-neutral
As you look for the best accounting software for your legal practice, consider whether you need accounting functions installed into your legal practice management software or if you’d like to separate case management and accounting functions.
Essential Features of an Excellent Accounting Software
When shopping around, you need an inventory of specific features and capabilities for your legal practice’s accounting software. A functional and reliable law firm accounting software must comprise several vital components focused on managing your company’s finances.
Here are the most crucial capabilities that you should always have in mind:
Expense tracking
You need detailed knowledge of where your finances are spent. From the overhead costs to expenses arising on behalf of the customer, you must constantly maintain accurate records. Just keeping receipts is unreliable as the data may disappear. But a reliable software should be able to track all expenses and strengthen accountability and revenue growth.
Time tracking
Timely and accurate time tracking can aid your law firm’s success, a crucial reason to acquire the right law firm accounting software. Paper-based tracking is inaccurate and unreliable, and you may end up under billing or overbilling clients. Your preferred accounting software should offer excellent time tracking capabilities to match your operations and needs.
Reporting options
A working accounting function must evaluate the company’s financial health regularly and identify areas of improvement. Accounting software can run numerous reports in different formats to help you gauge your profitability and keep a constant eye on your legal practice. With comprehensive reports, you’ll make informed decisions that benefit every element of your company.
Invoicing
This is a tedious and time-consuming task without the correct law firm accounting software. Staff must begin with revisiting client matter tasks and submit times to support teams who try to round up all the time tracking records. Finally, invoices will be manually created and sent out to clients. With legal accounting software, invoicing will be efficiently and quickly done.
Compliance
You’re obliged to comply with various ethics regulations based on your jurisdiction. For instance, in ABA Model Rules of Professional Conduct, Rule 1.15, you’ll find critical responsibilities regarding recordkeeping, holding trust funds, and notifying customers of property or funds receipt. Your preferred software should help you stay compliant with any relevant regulations to your industry.
Trust accounting
This is among the major duties that clients heavily rely on you for, but it has numerous responsibilities and rules that require the ultimate accuracy. An excellent legal accounting software follows every specific rule and maintains accuracy as you collect, reconcile and track resources.
Other vital features include:
- Bank or operating account management
- Retainer management
- Balance sheet
- Profit and loss statement
- Cash flow statement
- Amortization capabilities
- Asset and inventory management
- Line of credit or loan management
- Tax reporting
- Credit card management
- Expense tracking
- Bank account reconciliation
- Chart of accounts
- Online banking integration
- Billing and invoicing
With all these capability considerations in mind, it’s time to sample out the different types of accounting software that you can deploy in your practice.
The Top Law Firm Accounting Software
In our vast experience partnering with legal practitioners in their hundreds, here’s our comprehensive list of the top accounting software for your law firm:
Final Thoughts
Bookkeeping and accounting tasks can be a pain for legal practitioners. Managing attorneys who’d instead focus on their practice than deal with numbers loath the function, and most end up delegating it to office employees with equally limited accounting knowledge.
The result is an entire silo of error-filled, inconsistent records. The best move to avoid this would be to deploy the best law firm accounting software for your practice. The above guidelines will help you select the correct accounting and bookkeeping solution. However, partnering with a reliable IT company with vast experience in addressing legal IT needs can help you get the most of this technology.
Talk to us about getting the best accounting software tailored to your law firm’s needs.
