Spreadsheets v legal accounts packages

on 6 July, 2011 Email this Email this - Print this Print this

So, lets picture the scene. You are a sole practitioner and have just set up your new solicitors practice. There was a choice you had to make:

1/ Research and invest in legal accounts package

2/ Put the records on a spreadsheet

What are the implications of this choice…?

You have decided to go for spreadsheets. You know how they work, you’re fairly comfortable with Excel, and so you have also decided to keep the records yourself. (Are you with me so far?) You wouldn’t be on your own in this situation. In fact, a lot of small firms of solicitors go for this option. They create ledgers on spreadsheets and then add the receipts, payments and bills. This means that they have to keep a manual bills book. They do the bank reconciliations for the receipts and payments. And if they are vat registered, they’ll keep accurate records of payments made with vat and the bills book. Then they’ll use this information to work out their vat liability.

It all is fairly manual, arduous and heavy going work. Nothing is automatic and at the click of a button. Miss an entry, (or one side of it), and you’ll have to back track and retrace your steps to try and locate where it went wrong. Using a spreadsheet, you are able to record the expenses, but unable to produce a profit and loss, trial balance and balance sheet with ease. And doing the bank reconciliations isn’t easy – especially as you get busier and the transactions increase. Using spreadsheets in the beginning may seem like a good option, but invariably, they are very time consuming, easy to make mistakes and can end up costing you more money in accountants fees and fee earning time.

The alternative is to invest in a legal accounts package. There are MANY on the market which can cover al your needs. Right from the very basic ones costing a few hundred pounds right up to bigger ones costing several thousand pounds. In addition, you don’t necessarily have to buy software for one machine – some legal accounts packages can give you online access for as little as a monthly fee of £40 which then gives you the option of doing some yourself, as well as allowing your bookkeeper or accountant to have remote access so that they can either do some data entry inputting for you, or provide you with some financial analysis and management reporting on what the figures mean.

Do take note though – don’t go for just ‘any’ accounts software. There are popular packages out there – but they were not designed for the legal industry. The software needs to be a legal accounts package and has to comply with the SARs. You set up your clients on the system and post your receipts and payments and bills to the client’s ledger. The system will automatically produce a bills book and allocate the receipts and payments to the bank reconciliation area.

From here the bank reconciliation can be done. From the expenses and income posted, the system will produce the profit and loss, trial balance and balance sheet. And to get the VAT figures you go to the vat report and at the touch of a button you have the figures. At the end of the month you go to the reports and print off reports needed for SARs and it shows you how the business is doing.

But most importantly, using a basic cheap accounts package can cut your time by at least half. Your bookkeeper (if you decide to give the whole job over to someone like Boogles) can get on with it in your office (or remotely if you have internet access), and you’ll be far more productive and organised. Take our word for it – spreadsheets are just not cost effective or, for that matter – effective. They’ll ‘do’ for your first few months, but in your law firm, you don’t want to ‘make do’ – you want to start out on the right foot and stay on top.

Boogles Ltd

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Topics: bookkeeping · smaller law firms

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