16 Sep 2020, 14:30 — 6 min read
One of the reasons we build a legal firm or practice law is to create financial freedom for ourselves and our family. Why then do business accounting and finances in a legal firm so often get neglected?
Life gets busy and accounting gets pushed to the bottom of the to-do list …and can stay there for many months.
I would like to discuss some tips to improve your accounting system and automate some of the accounting tasks you aren’t finding time for. By this your regular activities are carried on and the Books are updated without any extra effort.
To complete the accounting what you may want is a specialised accountant who will on periodic basis check your accounts and finalise the small nitty-gritty for complete closure of accounts for a month.
First, let’s take a look at why you need to be on top of your accounting.
There are three key reasons:
Automation is not an overnight job but not as complicated as it is made to look. But a careful planning and informed decision will help a business to automate its accounting and save time.
Cloud based bookkeeping systems like waveapps can connect to your bank accounts via a bank feed and this can pull all the transaction details of the bank straight to your books.
You can create rules in the accounting software to allocate particular transactions to particular accounts. With artificial intelligence, cloud software integrates and records the transactions by its own based in entries made in the past.
For certain businesses which still keep a track of the income and expense on a spreadsheet, you now have a smart bookkeeping system which has removed the majority of manual data entry.
For instance, as automation cloud software gaining popularity in India - QuickBooks Online now uses AI to automate certain repetitive back-office work, reduce friction in getting paid, and improve forecasts of cash flow. This makes small businesses smarter, more successful and free to focus on the important work of delighting customers.
Most of country rules will have a requirement to keep copies of vendor bills for business expenses. So, the accountants tend to keep a bulky file to store all the bills and track it with entries in the books. This problem two-fold – One, tracking of the bills in a predetermined order so that it can be retrieved when needed and second, accounting for these bills so that the books are updated.
To overcome this problem, use tools which store these bills and accounts the transaction at the same time. It is a best practice to attach receipts to each transaction within your accounting software. Most of the online accounting software have this feature inbuilt today.
With a legal profession you will typically be invoicing customers and should look for accounting software with strong invoicing features. We can suggest you the right software based on evaluation of your client type and volume of transactions.
If you bill customers the same amount each month as you may sign for monthly retainer contract, look for a ‘repeating invoice’ feature which will automatically create and email your customer the invoice each month.
Making it easier for your customers to pay you can result in getting paid fast. Consider connecting a payment gateway to your invoice. Then, when customers click the ‘pay now’ button on your invoice, they will be taken directly to a screen to enter their Bank account details, Paypal or credit card details and they can easily make the payment for the invoice you sent.
To track the profitability of your customers, use tracking categories. Each income and expense item are then assigned to the relevant customer tracking code. You can then run reports on the profitability of each customer.
Whilst there are many benefits of using cloud accounting software, here’s what our clients love most:
1. Make smarter decisions. You’ll have a clear overview of your current financial position, in real-time.
2. Easier to collaborate. Multi-user access makes working with your team and advisors effortless.
3. Easy to set up and backup. Everything runs and is backed up online, so gone are the days of worrying about installing software.
4. Get Faster realisation. You’ll be able to realise your Accounts Receivables faster with real time tracking of outstanding customers.
5. Free up your time. Automatic software updates mean you can spend more time focusing on the things that matter (like surfing).
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.
Posted byDeepak Jain
Partner and Solution provider for MNC and Start-ups