Expense Tracking Tips for Solo and Small Law Firms
If you’re a small or solo law firm, expense tracking may often seem like an afterthought. There are so many critical tasks that fill your day, and rarely enough time to do them all. So maybe your expense tracking looks like a quick scroll through your bank history and a half-hearted search for receipts. We don’t judge.
That said, while expense tracking may not be as urgent as client case matters, it is an important part of business administration. If you underreport your expenses, you’re losing money. If you attribute expenses to the wrong client, you open yourself up to compliance violations. And if you overstate your expenses, even by accident, you open yourself up to an IRS audit—which nobody has time for.
Expense tracking used to be a manual task for businesses. Today, solo and small firms can take advantage of the latest tech tools designed to allow legal practices to track their expenses accurately and easily. By using these tools, you can turn expense tracking into the easiest part of your day, spend more time focusing on your clients, and build client trust through clear and transparent invoices
Expense tracking challenges for solo and small law firms
If you operate a solo or small law firm, you probably have a few operational pain points that drive you crazy. Maybe it’s time tracking, or sending out client invoices. Maybe it’s project management or team management. Maybe it’s running reports. The options are endless.
But here’s a secret you can borrow from larger firms: many repetitive, manual administrative tasks can be streamlined with some degree of automation.
Task automation does not replace jobs—it just makes certain tasks easier to complete (and less annoying). This frees up time for your firm to focus on client case matters, or high-level strategic projects to grow your firm.
Three tips for better expense tracking
Here are some tips for better expense tracking and ideas for tools you can leverage to create a smarter, more efficient system.
1. Use billing software with integrated time and expense tracking
Accurate time and expense tracking is critical to getting paid accurately for your work, stay in compliance, and build trust with clients. But many small or solo law firms default to manual tracking.
With time tracking, waiting until the end of the day (or even week) can cost you up to 25% of your billable hours in lost time. Incorrect reporting for time or expenses can result in breach of compliance with the ABA’s Model Rules of Professional Conduct and your state bar.
Manual time and expense tracking increases the chance for human error in attributing the correct expenses to the correct client codes. It can also erode client trust and extend the billing process, which can impact your firm’s liquidity.
Legal project management software is specifically designed to make it easier to run a law firm. Billing software helps firms automate tasks within the billing and invoicing process to speed up client payments, streamline taxes, and ensure accuracy.
Look for a billing software with integrated time and expense tracking. An automated time tracker allows team members to record their hours in real-time and attribute them to specific client or business codes. This client code automatically integrates billable hours into each client’s invoice. Instead of manually attributing each unit of time, your team just has to review each invoice for accuracy.
For expense tracking, team members can use similar features to attribute business expenses to client codes or administrative costs. By categorizing each expense with accurate details, you foster client trust with transparent, accurate billing practices.
2. Integrate your billing system with QuickBooks Online
For solo or small teams, taxes are often a dreaded and onerous part of quarterly operations. When you don’t have integrated expense, billing, and accounting systems, legal accounting can be a pain. It takes time, and you can end up scrounging for receipts and frantically double checking that everything lines up.
With an integrated billing system, firms enjoy several advantages:
- You know your expense tracking is up-to-date and accurate
- You have a thorough paper trail for all expenses and profit
- You can sync your expenses with QuickBooks Online
QuickBooks Online is one of the most popular tax and accounting software applications on the market for small businesses. When you use a billing system with full QuickBooks integration, your law firm gets the best of both worlds.
For example, Rocket Matter’s QuickBooks integration allows users to sync invoices, expenses, payments, trust account credits, as well as contacts and vendors. Accounting is always going to require careful preparation, but with the right tools, small or solo law firms can handle it with confidence.
3. Track expenses in real-time with mobile applications
It’s one thing to have expense tracking software. It’s another to be able to track expenses in real-time. When you’re away from the office, such as meeting a client for lunch or going to court, some expenses may sneak by your team. This costs you money and it can take more time later on to remember your expenses and sift through receipts.
Look for an expense tracker with a mobile application to track spending in real-time. With Rocket Matter’s mobile app, law firms can record expenses on the go. You can quickly add expenses and move on with your day without that nagging feeling in the back of your head that you forgot to do something.
As an added bonus, in addition to a mobile application for Android and iPhones, Rocket Matter also gives users the ability to track time and expenses directly from their email via Microsoft Outlook accounts.
Solo and small law firms don’t have the luxury of extra time, which is why flexible, agile tools are critical to streamlined operations. They meet you where you are, so you can move forward on client case matters without skipping a beat.
Streamlined expense tracking with Rocket Matter
Solo and small law firms have enough on their plates, and streamlined billing and expense tracking can make a big difference. Cross manual expense tracking off your to-do list with Rocket Matter’s legal practice management software with automated time and expense trackers.
Schedule a demo today and get ready to launch your law firm to new heights.