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Balance the Books with a Beat: Perfecting Your Law Firm Reconciliation Routine

accounting for law firms law firm bookkeeping law firm clients three way bank rec troubleshoot Nov 20, 2023

Alright, legal bookkeeping rockstars! 🎸 If you’ve ever dreamt of merging your love for numbers with some rhythmic finesse, today's your lucky day. (Okay, I am just back from QuickBooks Connect in Vegas, and still pumped up from our speaking engagement there!!  We’re about to embark on a funky journey to master the art of three-way bank reconciliation. And guess what? We’re grooving with Clio legal software to make this happen. So, grab your calculators, log into Clio, and let's make some financial music!

Why Three-Way Reconciliation is the Rock Anthem of Legal Bookkeeping

Before we start our jam session, let's understand the gig. A three-way reconciliation ensures the trust account bank statement, the individual client ledgers, and the general ledger trust all sync up. In layman's terms, it’s the financial equivalent of ensuring the guitars, drums, and vocals are all harmonies.

For law firms, this method is vital. It ensures

  1. Client funds aren’t mixed up with the firm's money.
  2. No funds go missing or get misused.
  3. Compliance with state bar regulations is maintained.

It’s like making sure no band member goes rogue during a concert!

Rockin' the Reconciliation with Clio: A Step-by-Step Guide

  1. Setting the Stage: Open up your Clio account. Under the ‘Reports’ tab, click the ‘Trust Ledger’ option. Here, you’ll see your trust accounts by matter and their balances listed.
  2. Guitar Check (Bank Statement): Start with your monthly bank statement balance. This is your lead guitar – essential for setting the tone.
  3. Drum Beat (Individual Client Ledgers): Next, sum up the individual balances of all client ledgers within the same period as the bank statement. This is the pulse and rhythm of your reconciliation tune.
  4. Sync those Tunes: All three balances - bank statement, total of client ledgers, and the general ledger - should harmonize beautifully. If they’re not, there’s a misstep in the dance somewhere. Time to review!
  5. Troubleshoot the Sound Glitches: If things are sounding off:
    •    Check for stale-dated checks.
    •    Look for deposits in transit.
    •    Double-check data entry errors in Clio.
    •    Ensure all interest disbursements have been recorded. 
  6. Encore!: Once your three components harmonize, document the reconciliation. Clio allows you to save or print this, making it easier for your future gigs (read: monthly reconciliations).
  7. Post-Concert Review: Regularly review old checks or undisbursed funds. Like revisiting old setlists, this ensures no song (or client’s money) gets left behind.

Wrapping Up the Gig

Much like a perfect beat gets everyone dancing, a spot-on reconciliation gets your finances grooving right. By ensuring your bank statement/bank account, QuickBooks client ledgers, and Clio matter balances are in perfect sync, you're safeguarding your client's interests and providing your firm dances to the right financial rhythm.

So the next time you’re balancing the books, remember: it’s not just about numbers; it’s about creating a financial masterpiece. And with Clio, you've got the perfect instrument to make that happen. Rock on! 🎵🎤🎧📊

Do you want to join our private group? We have a large collection of videos that you can learn from, and we hold weekly meetings every Friday at 9 am PT/12 pm ET.

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