A Series on Technology: Billing & Bookkeeping
For some, this recent crisis was manageable because they were already accustomed to working remotely. For others, it’s proven a nightmare. This is our third installment on technology. You can bury your head in the sand and wait for all this to pass or you can embrace the new technology available for your practice. It doesn’t require an IT degree or an IT department. Incorporating advances in technology into your practice is easier now than it has ever been. Even if you had stuck your toe in the sea of new technology, now is the time to wade in a little deeper. How can technology help your practice? How hard is it?
Let’s talk about billing and bookkeeping.
A law firm has two primary accounting functions – billing and operations. Both are equally important.
If you do great work for your clients but don’t get paid for it, you won’t be in business long. If you don’t have a good idea of what it is costing you to do that great work, your profitability becomes illusive. Your billing system should allow you to properly, efficiently, timely, and accurately track your productivity, your file-specific expenses, and manage your billing. Your accounting system should efficiently, timely, and accurately allow the payment and management of the overhead of your practice and also be able to give you a good idea of what your practice is costing.
Our recent social distancing experience might have challenged your billing and accounting systems. If they were people-intensive, or server-dependent, or heaven forbid manual, then their limitations quickly became apparent. Both systems could probably stand an upgrade.
I love bookkeepers. I’m not advocating throwing them out. But you need systems that they can use to easily, readily and quickly give you the information that you need to effectively manage your practice and your firm. Bookkeepers hate change (about as much as IT people do). So, don’t look for them to tell you that you need something new. But, like your IT people, they are smart. They will quickly learn any new system. And as with practice management systems, vendors can easily transition your data from your old system to your new one.
These two functions can be handled by one program or separate programs. Some practice management systems actually contain both.
Even if your practice management system has these capabilities, it may be a good idea to have at least your operating accounting system separate. Using a popular accounting software program will make it easier to transmit data to your accountant and will make it easier to hire someone (should the need arise) who can manage it. There are more potential staff members out there who are familiar with Peachtree or QuickBooks than there are those who are familiar with even the most popular practice management systems.
With proper training, billing can easily be done by the people most familiar with the file. Gone are the days when you actually need a separate billing person or department. This ensures that billing is done timely and is more accurate. Again, most practice management systems have a billing component. So long as it can be integrated with and into your overall accounting software, there may be no need for a third software platform. These systems also allow you to manage and track case expenses.