Expense Recovery in PCLaw

How Expense Recovery entries are made in PCLaw is mostly a matter of style, and how you want the expenses displayed on your income statement. The more detailed approach takes more time and therefore costs more in wages. But the detailed method makes it is easier to track expenses and ensure full recovery. You need to weigh the cost versus recovery to determine which method will work best for you.

The two main methods for posting client disbursements are:

1. Post any and all disbursements to a catch-all client disbursement expense account.
2. Post expenses to category accounts.

The first method is straight forward – All entries for client expenses and expense recovery are posted to the Client Disbursements control accounts (1210 and 5210). 

When using the second method, you set up your expense accounts and add corresponding expense recovery account. You post (no matter number) the expenses paid by general account entries to Postage Expense, Courier Expense, Court Filings Expense, Process Serving Expense, etc.  Immediately do an Expense Recovery for the appropriate matter(s), for the same amount, and post to Postage Recovery, Courier Recovery, Court Filings Recovery, Process Serving Recovery, etc.

Using the first method makes it difficult to track the disbursements, and ensure your costs are being fully recovered. Writing a cheque to pay a vendor, without first entering a matter number, is a very common error. You promise yourself that you will return to the cheque entry, to enter the matter, by forget to do so.

Using the second method, you can compare the dedicated Expense accounts to the Recovery accounts, and it will be obvious if some items are missing.

A variation of the second method is to post both the expense and the expense recovery to the same category account.  At the end of the month/year, the account should have a zero balance, if you indeed passed on all of the disbursement costs. If not zero, you should be able to quickly identify the missing entry and bill the client.

As always, I invite your comments and suggestions for future post topics. Next week – PCLaw versus Cloud bookkeeping.
 
Clyde

Why I prefer PCLaw

 I often get calls from lawyers opening up their own practice, asking advice on which accounting software to purchase. I have used everything from Simply Accounting and Quickbooks to PCLaw and Amicus. I prefer PCLaw.

If you have no trust account, Simply Accounting or Quickbooks will work fine for you. It will even work if you have a very limited volume of trust transactions. However, if you have an active trust account, these general accounting programs will be inefficient to use and will not produce the reports you need.

PCLaw works like any other accounting program, but has fully integrated trust transactions into daily tasks. Out of all of PCLaw's features, the one I like the most is the “Add” buttons on pop-up windows. These allow you to add what you need “on-the-fly”, rather than stopping, adding, and then restarting your entry. This is a real timesaver.

PCLaw is not without its own little quirks, and it does tend to collect some imbalance errors. But with regular maintenance, these are minor issues when compared to PCLaw’s ability to handle a law firm’s bookkeeping with relative ease.

What is your opinion on PCLaw? Do you use something else?

As always, I invite your comments and suggestions for future post topics. Next week – Expense Recovery in PCLaw.

Clyde

How to post a car purchase in PCLaw

I received the following enquiry from John:

“I purchased an automobile. I have not purchased a car since I installed  PCLaw, and I want to make sure that the assets and liabilities are posted correctly. I cannot simply use  the GL adjustment feature since the amount to be posted for the loan will be more than the amount posted for the purchase of the asset. It is financed for 100% of the purchase price, less the automobile taken in trade, through the dealer’s bank.  The conditional sales contract includes the cost of financing (total interest payable over the term of the loan).”

“Can you advise either as to how to most appropriately post my purchase and loan so as to reflect my intentions, or advise as to a more appropriate manner in which to post them?”

My reply was:

“The simplest way is to create asset and loan accounts that balance. You will have to adjust your capital for the trade-in, if not already listed as an asset.”

“Pay down the loan account throughout the year. The loan balance will decrease faster than it should, because you are including the interest in the payment.”

“At year-end, debit the interest account and increase the loan (returning the excess taken out) by crediting the loan account.”

This simple method has the advantage of allowing you to use the Recurring Entry feature in PCLaw. There are many alternatives, including setting up the loan as an accounts payable, accounting for interest and principle on each payment, or posting interest and depreciation as a capital investment at year-end, to name but a few.

As always, I invite your comments and suggestions for future post topics. Next week – Why I prefer PCLaw.

 

Clyde

How to Reconcile your PCLaw Accounts Receivable with your client’s Accounts Payable

 

If you have clients that pay by invoice number, they may also occasionally pay their invoices out of chronological order. You may both have the same total balance owing, but show different amounts on different invoices. This is because, by default, PCLaw applies payments received using the Matter or Client boxes to the oldest invoices first.

 

To reconcile with your client, first obtain a printout of their Accounts Payable ledger.

Compare your Accounts Receivable ledger with their A/P ledger, and determine which invoices you show as having been paid, but your client still shows outstanding.

Use the Register to locate these payments, and Void them as of today’s date.

Then do Receive Payment (see 1 below) to pay the invoices your client shows as paid.

The voided receipts and the new payments received will cancel each other for the bank reconciliation. Your A/R report should now match your client’s A/P report.

To avoid this happening in the future:

1. On the Receive Payment entry, fill in the invoice box number, rather than the matter or the client box; OR
2. Turn off “Auto Allocate Payments to Invoices” in System Settings – Data Entry – Payment Rules.

As always, I invite your comments and suggestions for future post topics. Next week – How to post a car purchase in PCLaw .

Clyde

PCLaw Bookkeeping

I thought it might be nice to start a group where PCLaw users could talk to 
each other, ask questions, share tips and tricks, etc. 

Feel free to invite your co-workers, friends, or anyone you feel would be 
interested.

This will be a moderated group, to avoid members being spammed. 

Here is the group's description:

Of interest to lawyers and their bookkeepers. Users of PCLaw - discuss, advise, tips and tricks, etc. Lawyers can post seeking bookkeepers. Bookkeepers can introduce their services (once - no spamming).

http://groups.google.com/group/pclaw-bookkeeping?hl=en

Clyde

Part 2 of Adding a New Bank in PCLaw – Steps to follow while moving your bank accounts

Last week we added new banks in PCLaw, but now you need to smoothly transfer your banking from one institution to another.

• The first thing to do is examine your last bank reconciliation, to determine which cheques are still outstanding, plus any cheques you have written since. Add to this figure, any Pre-Authorized Payments (PAPs) you have set up and your estimated bank fees. You can then transfer any funds surplus to this amount to the new account.  
• With money now transferred, you can change your PAPs to the new account.
• Continue monitoring your PAPs. If funds are withdrawn from the old accounts, replace them to avoid any NSF charges, in the unlikely event two payments are processed before the change occurs.
• After you have confirmed that all of your PAPs are appearing in your new accounts, and the outstanding cheques have also cleared, you can close your old accounts. If you have only one or two cheques left outstanding, you may wish to issue a stop-payment and send a replacement cheque.

Now that you are using your new accounts, you will want to make them your default banks in PCLaw. Options – System Settings – Banking tab – change the bank number(s) – OK.

As always, I invite your comments and suggestions for future post topics. Next week – How to reconcile your PCLaw Accounts Receivable with your client’s Accounts Payable.

 

Clyde