Proper Record Keeping

Proper record keeping is critical for the success and legal compliance of any business (especially a law firm).  The negative repercussions of poor accounting and bookkeeping practices can have a serious impact on your practice.  In this article, we'd like to address the basic record keeping policies that will help your firm maintain a solid (and compliant) accounting system.
 
First and foremost, your record keeping policies should define the types of documents that will be stored.  These might include:

• Articles of Incorporation
• Bank Statements and Reconciliations
• Credit Applications
• Financial Reports
• General Ledgers
• Journal Entries

Obviously most law firms will be aware of which documents must be stored to remain compliant with state policies.  However, if there are any questions it's best to consult a national legal services firm that works daily with corporate governing bodies across the country.

Second, your record keeping policies should address the length of the term the various documents will be stored.  Using the same examples above:   

• Articles of Incorporation should be stored indefinitely
• Bank Statements and Reconciliations should be stored for a minimum of 6 years
• Credit Applications should be stored as long as the customer remains active
• Financial Reports should be stored as long as management requires
• General Ledgers should be stored as long as the company exists
• Journal Entries should be stored for a minimum of 10 years

Again, the specific parameters for every document must adhere to the requirements of the state in which the company is structured.  Considering the increasing affordability of virtual storage, it's better to be safe than sorry.

Finally, your record keeping policies should include where the documents are stored and who will oversee their maintenance.  Companies can either build an internal repository (if they have the IT resources), or contract with an online storage site.  Regardless of which path is chosen, the document retention and its management should be centralized and respected.  The department and processes must allow for the most up-to-date security while maintaining easy access to all appropriate parties.

Unfortunately, many firms fail to understand the most important reason for defining and following these record keeping procedures:  cost savings.  Because accounting systems are seen as a costly but necessary evil, many discount the ROI that can be achieved through proper accounting systems and the need for the complete accounting services that make it all possible. Before you make the same mistake, consider the cost of missing records or incomplete information, and the potential savings offered by a more organized and focused storage system.

Consider Legal Time and Billing Software

The daily requirements for operating a law firm are steadily increasing. Lawyers are tasked with keeping up with ever-expanding state and federal statutes, preparing documents and advising clients accordingly and somehow managing to build a practice at the same time.

While technology can only go so far when it comes to digesting volumes of legal information and communicating it back to clients, time and billing software can go a long way toward helping you focus on the business aspects of your practice (with a minimal time investment).

Here are a few points to consider when deciding whether or not time and billing software can help your law firm:

First, legal time and billing software can assist you in the simple and immediate capture of all time tracking. Regardless of your workload or location, you can easily record the basics of tracking your work, then revisit it later to add in the finer details. Some software offers timers that you can start and stop, while others are more basic providing a place for after-the-fact time capture. Think about how you'll use the software and what features you need (and want) with regards to capturing your time.

Second, legal time and billing software can help with expense tracking. Yes, those mountains of receipts can be tracked in this all-in-one solution. It helps you to capture your expenses, then differentiates between out-of-pocket, soft costs, etc. More advanced software even accounts for these differences and produces useful financial statements for both personal and client use.  Consider the level of detail that can automatically be managed and how the entire process can be streamlined.

Third, time and billing software allows your law firm to manage outstanding bills. Not only does it make it easy to reference who owes you what, but it also allows you to track and apply payments back into the system as they are made. With this software, it is easy to get a snapshot of the results of all of your hard work and keep track of the most minute of details regarding its management.  How much time and stress would having this information at your fingertips save you?

Finally, the right time and billing system can integrate seamlessly with your bookkeeping system. The best software can compliment the bookkeeping services your law firm uses, providing them with valuable details and returning advanced reporting to help you make intelligent business decisions.

If you're not using time and billing software, you are unnecessarily making it harder on yourself and seriously limiting the number of hours that you can bill to your clients!