Understanding the Challenges of Clio Software for Law Firms | Best Tips for Bookkeeping
Jul 10, 2023In this article, I will shed light on the challenges associated with using Clio, a legal software, and share valuable tips and insights. My intention is not to criticize the software but rather to provide an understanding of the issues that members of the Law Lab may encounter. Furthermore, I would like to share some tips that I learned recently to address trust balance discrepancies and alignment with Clio.
The Backstory
Before delving into the details, let me provide a brief background. This client needed to integrate the software properly, so my business partner, Sarah Prevost, coded and set it up to establish a connection and import all invoices and payment transactions from Trust. This allowed me to analyze their bank feed, reconcile their bank statements, and start fresh.
The Process
To provide context, this client had not integrated Clio into their workflow, so we back-coded and set up Clio to seamlessly import invoices, and payment transactions, into QuickBooks. Equipped with this setup, I was prepared to resolve discrepancies related to the Trust balance and its alignment with Clio.
Identifying and Correcting Issues
My initial step was to reverse the bank reconciliation and eliminate all the transfers the client had entered into QuickBooks. While clients often assume that transfers are a recommended approach due to suggestions from the QuickBooks bank feed, I strongly advise against using transfers in QuickBooks under any circumstances.
Once this task was accomplished, I proceeded to re-reconcile starting December 31st. However, I encountered a challenge during the reconciliation of January, wherein two transactions that the prior bookkeeper had cleared in December were cleared in January. It became increasingly evident that the past bookkeeper forced a reconciliation using many adjusting journal entries to make the math work for them. Many of these adjustments were booked against the retained earnings account.
Consequently, I had to revise the previous reconciliation and address these inaccuracies to correct the status of those transactions. It is important to note that our contract only covered the cleanup for 2022. Therefore, I focused on rectifying January's records and tailored adjustments accordingly, allowing me to release the two erroneously reconciled transactions.
Other issues
One common problem is the need for an account for interest clearing, which should be a sub-liability account. Failing to account for this can lead to discrepancies in totals. Additionally, missing transactions and improper recording of payments can cause further complications. It is crucial to match payments and carefully ensure correct amounts are matched. Understanding the inner workings of the software is essential. By investigating the root causes of these issues and seeking expert guidance, one can navigate the challenges and help others.
Furthermore, other mistakes can arise, such as missing transactions in the legal software or self-payments without corresponding bank-level payments. Identifying and rectifying these errors requires meticulous attention to detail.
Matching payments can be daunting if clients do not date transactions consistently. My business partner, Sarah, emphasized that undeposited funds should not be used in Clio. Instead, clients should match an array of payments to be transferred collectively as one large transfer (deposit to the operating bank account).
If discrepancies occur, it could indicate incorrect payment amounts entered during the creation of the payments by the attorney on the Clio side. A keen eye for detail and a comprehensive understanding of the software are critical for effective problem-solving.
We discovered many misalignments with the Clio entries and the funds transferred from the bank. Undertaking this endeavor is no small feat. I hope to assist others in identifying and resolving similar challenges when working with Clio and managing client transactions accurately.
Conclusion
Clio users may face difficulties similar to those described above. By sharing my journey and providing tips, I hope to assist other Law Lab members in resolving similar issues and optimizing their use of Clio legal software. With the proper knowledge and approach, overcoming challenges and utilizing Clio to its fullest potential is possible.
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