The Law Factory LLP has covered the topic of legal accounts software many times in blogs, articles and on The LawCast but we have focused primarily on different types of legal accounts software and the overall picture.
In this article we are going to focus on some of the newer features appearing in legal accounts software and the benefits of using them.
First up in our review of legal accounts software features are bank feeds. Bank feeds have featured in non-legal accounts software such as Xero and Quickbooks for some time, but we are now starting to see them in legal accounts software itself.
A bank feed is an integration with the firm’s bank account where the activity of each account is automatically fed into the bank reconciliation on the accounts software. What happens at this point is that the cashier/bookkeeper then either reconciles entries already made on the cashbooks to the bank feed or uses the bank feed to post the entries directly to the client ledgers/general ledger. This is much more efficient, especially if the feed is smart enough to be able to identify which client ledger/nominal ledger the banked entry needs to go to. The cashier then can simply check it and authorise the entry, reconciling it at the same time.
There are also packages on the market which allow for automated postings. For a legal cashier, this is somewhat of a “game-changer”. Once the legal accounts software has been linked to the bank account, it is able to read certain information provided when clients pay and then automatically post the entries to the correct ledger. The cashier’s responsibility then shifts from posting entries manually, to monitoring and ensuring everything is entered in the correct place. It will also enable them to spend more time on higher level activities.
It is also important in 2023 to help clients of law firms to pay more easily. The days of cheques and cash have passed and the preferred method of payment is by bank card rather than direct bank transfer. Legal practices therefore need to make it as easy as possible for people to pay their invoices. This will help the law firm maintain a good, positive cashflow. Legal accounts software can now provide direct payment links on bills which are sent electronically. They can also integrate with outside programs that can provide a personalised payment portal where clients can login and pay directly. Not only do these portals make it easy for clients, but they also provide crucial payment details for the firm. Portal systems can provide the law firm with statistics showing when invoices were sent versus when the client paid them. This information can then be used to determine when it is best to send bills to clients. Often clients will pay faster when the bill is sent to them on or just after their pay-day and most will pay at lunchtime. This makes logical sense and seeing payment habits in software statistics allows the legal practice to alter their approach for the benefit of their cashflow and lock-up days.
Another crucial aspect to legal accounts software is the Know Your Client (KYC) element. Law firms receive thousands of pounds from individuals and ensuring the client is legitimate is vital. This is confirmed by way of a full Anti-Money Laundering (AML) check and a Source of Funds (SoF) check. Case management software can now perform these checks, mostly with outside integration. Companies are trying to make it easier for law firms to perform full KYC checks. Many allow for the clients themselves to upload all the necessary documentation via a portal which is then linked directly to the case management system, giving the firm confidence that they are working for an upstanding client. It also gives the legal accounts department confidence that the money the firm receives has been legally acquired because the SoF checks have been undertaken correctly.
I have focused on a few features that firms may not yet be taking advantage of, but there are many more aspects of legal accounts software that could be utilised, such as search company integrations, billing and time integrations and bespoke auto-reporting for management information.
The thing to take away from this article is to investigate what your software is capable of and determine what can be utilised for the benefit of your firm and your legal accounts department. Often many aspects are already being paid for, so invest a small bit of time researching, then maximise your use of it!
The Law Factory LLP can help you to make the most of your existing legal accounts software or assist you with a move to a more intuitive system.
Outsourced Accounts & New Business Manager
The Law Factory LLP