money matters for law firms

MONEY MATTERS FOR LAW FIRMS

Micky DemingKahunaAccounting

4WaystoSecureYourFinancesin2016

JoshuaLenonClio

#ClioWeb

Instructor

Joshua Lenon

• Lawyer in Residence at Clio• Attorney Admitted in New

York• @JoshuaLenon

#ClioWeb

Whatwe’llcover1. FinancialSystemsandOrganization

2. TaxSeasonPreparation

3. TrustAccountingBestPractices

4. MaximizingTime

#ClioWeb

AboutKahunaAccounting• 20yearsinbusiness• 10yearsofoutsourcedaccounting• 3yearsdoingnation-widebookkeepingwith

Xero• Haveworkedwithhundredsoflawfirms

acrossthecountry

#ClioWeb

TheAccountingChallenge• SourceofAnxietynotclarity

• Pooruseoftime

• “Keepsmeupatnight”

• Aneutralexperienceatbest

#ClioWeb

DoesitHavetoBethisWay?• SourceofAnxietynotclarity

• Pooruseoftime

• “Keepsmeupatnight”

• Aneutralexperienceatbest

#ClioWeb

OurGoalTakeaccountingandfinancesfromaplaceofanxietytoaplaceofclarity

GoodNews!Itdoesn’thavetobethisway.Thetoolandinfrastructureareinplacetoautomateandsimplifyaccounting.

#ClioWeb

Howtotakeaccountingfromanxietytoclarity

1. Makeitapriority

2. Usetechnologytoincreaseefficiency

3. Makeitateameffort

STEP1:GETTINGORGANIZEDANDSYSTEMATIZED

#ClioWeb

Biggestsourcesofanxiety• TrustAccounting• TaxSeason• Notunderstandingviabilityofbusiness• Invoices/trackinginvoices• Wastingtime

#ClioWeb

Identifythesourceoftheanxiety

• Allfinancialproblemscomefromnevergettingintoaworkingsystem

#ClioWeb

Aworkingsystemprovides:

● Stress-freetax-time

● Confidenceintrustaccounting

● Ascoreboardforyourbusiness

● Getinvoicespaidfaster

● Saveatonoftime

#ClioWeb

Howdoyougetthere?

• Technologythatworks

• Makeitateameffort

• Makeitapriority

#ClioWeb

TechnologyThatWorks

• PracticeManagementsystemyouarecomfortablewith• Trackclients

• Createinvoices

• Ismobileandeasytouse

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Track Trust Accounts

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Transactions

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Trust Ledgers

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Statement of Accounts

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TechnologythatWorks

Alotoflawyershaveapracticemanagementsystemtheyrelyonandunderstand.

Ex:Clio

Butnotmanyhaveanythingsimilarfortheiraccounting

#ClioWeb

AccountingTechnology

• LawPay orClioPaymentstoacceptpayments

• Cloudaccountingtotracktransactions

• Shouldbeabletodo100%ofyouraccountingwithoutdataentry

• Example:Clio>LawPay >Xero >GustoforPayroll+LiveBankFeeds

#ClioWeb

Technologycanaddtotheanxiety

Allthistalkabouttechnologycanbeintimidatingandoverwhelming.

Thisoverwhelmpreventsaction

#ClioWeb

MakeitaTeamEffort

• Wouldyouadviseoneofyourclientstodoasmuchoftheirlegalworkontheirownbeforeaskingaprofessionalforhelp?

• Accountingissimilar– Youshouldhaveaprofessionaleitherdoingitforyouorprovidingyouwithguidelines

#ClioWeb

MakeitaTeamEffort

• Companieshaveaccountingdepartmentsforareason

• Whataresomewaysyoucangethelpandsurroundyourselfwithpeoplewhounderstandit?

• Bonus:Yourfinancialteamshouldunderstandthetechnologyforaworkingsystem=lowerstheanxiety

#ClioWeb

MakeitaPriorityToomanylawfirmstreatfinancialsasanecessaryevilanddon’tprioritizeit.

That’sacriticalmistakeandaddsatonofstress

Whenyoumakeitapriority,youcangetintoasystemthatworksandstopplayingcatch-up

#ClioWeb

MakeitaPriority

What is the ROI of reducing anxiety and increasing clarity?

#ClioWeb

Gettingintoaworkingsystem1. Technology

2. Team

3. Priority

Nothingelsewillmatterifthesedon’thappen

STEP2:THESIMPLIFIEDTAXSEASON

#ClioWeb

TaxSeasonforMostPeople1. Overwhelming

2. Frustrating

3. Notvaluable

4. Wasteoftime

5. Tryingtosaveliability

#ClioWeb

Reframetheobjective• Whatifhavingahealthybusinesswasthe

ultimategoal?• Taxseasonisanecessity,butshouldn’t

interferewithstrategicgoals• Cashismoreimportantthattaxsavings• Yourtimeismoreimportantthantaxsavings

#ClioWeb

Abettergameplan• Professionaladvisor

• Workingsystemthroughouttheyear

• Regularadvice

• Strategic,notreactive

Systems>Team>Priority

#ClioWeb

ProducingReportsonDemand• Ifyoucandothis,youhavewhatyouneed• Shouldbeabletoimmediatelyproduce

BalanceSheetandProfitandLoss• Allowsyoutoworkcollaboratively,andkeepa

fingeronthepulseofthebusiness

#ClioWeb

HowtoProduceReportsonDemand

1. ProperAccountingSystem2. Setupchartofaccounts3. Reconcileaccountsregularly(orfindsomeone

todoit)Systems>Team>Priority

PART3:TAKETHEANXIETYOUTOFTRUSTACCOUNTING

#ClioWeb

TrustAccounting• Makeitapriority

• UseTechnology

• Makeitateameffort

#ClioWeb

Lawyerstypicallyprioritizetrustaccounting

• It’sapriority,butit’sasourceofanxietybecauseyoudon’tknowforsure!

• Youwanttoknowit’sright

#ClioWeb

Theessentials• Keepclientfundsseparatefromyourfunds• Moneyintrustisnotyetearned• Transfermoneyasit’searnedanddocument

movement• Trackclientstatementsandproducereports

onwhat’sbeenearnedandthecurrentbalance

#ClioWeb

Youprioritizeit,youunderstanditsowheredoesitgowrong?

1. Terriblesystemfortracking

2. Depositinoperating

3. RecordinCliobutdon’ttransfer

4. Maketransferbutdon’trecord

5. Markthedepositasincome

#ClioWeb

ExampleofWorkingSystemforTrustAccounting

• Clioaspracticemanagement

• Xeroasaccountingsoftware

• Teammemberwhounderstandsbothandiscomparingtobank

Priority>Technology>Team

#ClioWeb

1.ReceiveRetainerPayment• Depositintotrustaccount• AdddepositinClio(selecttrustaccount)• Whenfundshittrustaccount,Xeroseesit

happenatthebank• Enteraspre-paymentinXero,soit’snot

income,butaliabilityaccount(oweduntilit’searned)

#ClioWeb

Recording Trust Deposits1. Account: The ledger account to apply the funds to;2. Amount: Enter the amount received. (If needing to

return unused funds to the client enter the amount with a negative symbol ie: -500)

3. Date: When you received the funds4. Source/Recipient: (optional) Who you received

the funds from (source) or who are you giving them to (recipient).

5. Type*: (optional) How the funds were received or how you are sending the funds (ie: check, credit card, cash, money order, Paypal, etc.).

6. Currency: (optional) When receiving funds other than your current default currency (ie: euros, pesos, pounds, etc).

7. Exchange rate: (optional) Goes with Currency, enter the exchange rate

8. Description*: (optional) The reason you received the funds. You can be as brief or detailed as you like.

9. Check or Reference: (optional) Helpful to track when consolidating with your bank statements

#ClioWeb

2.BillingYourTimeGenerateBillinClioforyourworkandnowthebillis“AwaitingPayment”Click“ReceivePayment”andseeaprompttorecordtransferoffunds.ChooseTrustfortheSourceandOperatingfortheDestinationandclick“ReceivePayment.”NOTE:ThismarksthebillpaidinClio,butthefundshaven’tactuallymoved.

#ClioWeb

Receiving Payment1. Choose the proper bills from the dropdown (if

the client has more than one).2. Choose the proper Source Account (where the

funds are coming from). If the bill has multiple Matters, then you will only be able to select funds in an account (i.e. Trust) that are at the client level and not linked to a specific Matter.

3. Choose an operating account for the destination of the payment funds.

4. The amount of the bill will populate into the "Payment" field. If the client has less funds in their Source account you will need to adjust the amount of the payment accordingly.

OR5. If the bill contains charges for multiple Matters,

you can click the "Expand" link to allocate payments to specific Matters on the bill.

#ClioWeb

Receiving Payment

#ClioWeb

2.BillingYourTime

Afterrecordingthetransfer,makesureyoumakethetransferatthebank.

Onceyou’vecreatedthebillinClioitwillsynctoXeroandshowit’sawaitingpayment.

#ClioWeb

3.ReconcilingtheTransferReconcilingfundsprovidesathirdcheck.

OpenyouroriginalPre-PaymentinvoiceinXeroClick“Creditthisinvoice”toallocatecreditfortheinvoice.Thiswillreducetheamountinyourpre-paymentanddisplaythetransferfromtrusttooperating

#ClioWeb

ThreeLevelsofTrustAccounting1. ReviewTrustAccountLedger

2. ComparetoBankAccountTotals

3. ComparetoCurrentAccountsinXero

Allthreeshouldmatch.Ifnot,atransferwasmissedorasomethingwasn’tmarked.

Ifit’sonlyyourpracticemanagementandbank,youcan’tfindwhatwasmissed.

PART4:GETTINGYOURTIMEBACK

#ClioWeb

GettingintoaSystemProvides

1. Peaceofmind

2. Simpletaxseason

3. Greaterbusinessinsight

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OneLastCriticalBenefit

Gettingbacksometime!

#ClioWeb

Timeisyourmostvaluableresource

Lawyersinbigfirmsspend80-90%oftimeonbillablework

Inasoloorsmallfirmthatgoesdowntoabout40-45%

#ClioWeb

Time

Inasmalllawfirm,youhavetobeabsolutelyrelentlessinhowyouuseyourtime.

Youalreadydon’thaveenough

#ClioWeb

YouarePartofaRevolutionBy2020,40%oftheworkforcewillbeself-employed

Tools,systemsandinfrastructurearebeingcreatedtosupportthisneweconomy

Don’tmaketheshiftandbringoveroldparadigms

#ClioWeb

Accountingisamajorwasteoftime

1. Taxes

2. Trustaccountingworries

3. Dataentry

4. Reconciliations

5. Papermovingfromplacetoplace

#ClioWeb

Theultimatevictory

Youhaveconfidenceinyourfinancialsandareabletospendyourtimewhereyouaremostvaluable.

Doingwhatyouloveandaregreatat,anddoingwhatbringsinbusinessandrevenue.

#ClioWeb

Addingupthetollofapooraccountingsystem

1. Wastestimeandtakesyouawayfrommeaningfulactivity

2. Addstoanxietyandstress

3. Putsyouatriskwithtrustaccounting

4. Providesnoinsightintothehealthofyourbusiness

#ClioWeb

ThePerfectAccountingSystem

1. Peaceofmind

2. Simpletaxseason

3. Greaterbusinessinsight

4. Investyourtimeinmeaningfulactivity

5. Haveprofessionalsyoucandependon

#ClioWeb

HowtoMoveForward1. Makethisapriority

- Financialsareapriority-Yourtimeisapriority- Reducingyourstressisapriority

2. Findateamyoucantrust- Understandslawfirms,accountingandtechnology

3. Gettherighttools- Streamlineyourfinancialsandmakeiteasy

THANKSFORLISTENING!Moreinformationat

Kahunaaccounting.com/clio

Emailmeat:micky@kahunaaccounting.com

#ClioWeb

QUESTIONS

#ClioWeb

Thank You

Joshua Lenon

joshua@clio.com

@JoshuaLenon

Linkedin.com/in/joshualenon