If you run – or are part of – a law firm, you might already be familiar with the many challenges involved with operating in this sector. From complex cases to difficult clients and fierce competitors, there is probably already a lot on your plate.
To add to this already complex scenario, you also have to think about managing your finances in the best, most accurate, and most legally compliant way. This can be complicated, particularly if you have a wide range of clients, cases, and expenses.
Accounting software can help. With this indispensable tool, your law firm will be able to stay on top of its accounts at all times. Keep reading to find out more about accounting software, its benefits, and how you can pick the most suited for your company.
Accounting software: Definition and benefits for law firms
Accounting software is a digital tool that’s specifically designed to help businesses of all sizes and across all industries manage their finances through automation.
Through this solution, companies can keep track of their expenses, record all their financial transactions, create and send invoices, and calculate their taxes. Many accounting software tools also seamlessly integrate with other software solutions, which means that the overall accounting process becomes even more streamlined across the company’s entire digital ecosystem.
As a law firm, you stand to gain several benefits from using this tool – here are some of the most significant ones.
1. Time savings
As we mentioned, one of the main features of accounting software is its ability to automate certain tasks and processes. So, for example, things like tracking expenses, creating and sending invoices, importing data, and sending payment reminders to clients will no longer be manual.
This results in huge time savings which, in the crowded and competitive world of law firms, can translate into being able to focus on the cases you are currently handling instead of financial admin, thus boosting your chances of success.
2. Fewer errors
For law firms, financial errors can be disastrous – especially when it comes to failing to complete a mandatory payment or using incorrect data to file taxes. Frustratingly, though, manual accounting processes are often the perfect breeding ground for human errors, which can cost your law firm a lot – both in terms of money and reputation.
This happens because many law firms work around the clock and under a lot of pressure, leaving even the most dedicated of professionals much more prone to making easily avoidable mistakes. From data entry errors to data duplication and omission, the errors you can make are too many to count – but they will all be a thing of the past if you start using accounting software.
Thanks to its high accuracy and automation, accounting software will enable you to always work with the freshest, most precise data, thus helping you keep your books current and in good order. Because you’ll be consistently handling the right data, you’ll also be able to make much better, more informed, and more timely financial decisions for your law firm.
3. Simplified accounting processes
Another great advantage that you stand to gain from leveraging accounting software is the great simplification of your entire financial processes. Let’s consider, for example, tax season.
This can be one of the most stressful times of the year for your law firm, as you’ll need to sift through your books and identify all the financial-related data from potentially hundreds of cases you’ve worked on during the year.
Accounting software, on the other hand, lets you generate tax reports swiftly and easily by enabling you to find all the right records literally at the touch of a button. Moreover, it also allows you to always remain fully compliant with the latest tax regulations – another must-do, especially as a law firm, as you want to project a professional and compliant image.
Selecting the right accounting software: 6 best practices
Now that you know what accounting software is, what it does, and what benefits you can reap from using it for your law firm, it’s time to find out how to choose the best online accounting software. Here are six things to think about during your selection process.
1. Consider the size of your law firm
Whether you specialise in divorce and family law or are a lawyer dealing with criminal cases, and whether you are running your own legal practice or are part of a large studio of attorneys, you’ll need accounting software to manage your finances at best.
However, when you’re in the process of identifying the right accounting software for you, you’ll need to consider the size of your business, as this will lead you directly to figure out your requirements in terms of software features, cost, and more.
A tiny law firm will likely have different needs compared to an international group; remember, though, that the software you choose should also be relatively scalable. Right now, you might only be dealing with a handful of clients and cases, but if your law business is growing, your accounting requirements will grow too, so you’ll need a tool that keeps up.
2. Identify the features you need
These days, accounting software tools can be as varied and sophisticated as the requirements of their users, which means that some of them may include a vast array of extra features that you might be interested in.
However, before jumping into the purchase of a piece of software that is likely going to be a lot more expensive (and, potentially, more complex to handle), consider whether you genuinely need all of those extras. If you don’t, then opt for a simpler, more affordable, and more suitable alternative.
3. Verify the integration with other business-critical software
As we mentioned earlier, accounting software works even better when it integrates with other critical pieces of software that you are already running, or are planning to deploy in the near future to aid in the management of your law firm.
So, when evaluating different options for your firm’s accounting software, make sure that the final choice is a tool that seamlessly works with the rest of your digital landscape, including solutions such as your CRM, your case and practice management software, and your legal software.
4. Explore different pricing options
Naturally, at some point in your quest for the best accounting software, you’ll need to think about your budget. As we discussed, features and integrations are crucial factors, but so is money. You’ll want, therefore, to consider how much money you are able – and willing – to spend on this solution.
In parallel, you will also need to consider whether you are happy to compromise on a slightly higher price if that means benefitting from better features and functionalities that will greatly help your law firm.
5. Ensure full compliance with current regulations
Every business must operate in full compliance with industry-specific regulations, but this applies even more to companies in the legal sector, as they want – and need – to convey an image of lawfulness and professionalism in order to attract new clients, reassure their existing ones, and never lose ground to savvier competitors.
Compliance, then, should be another priority for your law firm to consider when choosing the right accounting software. By enabling adherence to all current laws and standards, accounting software offers you the peace of mind that all your legal obligations are taken care of.
6. Assess the tool’s user-friendliness
Another important element to take into consideration is the tool’s usability. Unless you run a large law firm with a dedicated accounting department, the chances are that you will use your accounting software independently, which means that great user-friendliness is a must.
Before purchasing a piece of software that you think will work great, then, consider running a few demos of it, and ensure that whoever is going to use it agrees that it’s intuitive, quick, and simple to learn.
Wrapping up
Freelance lawyers and large law firms alike need to keep a close eye on their finances if they want to thrive in a highly competitive sector. At the same time, precisely because they operate in a strictly regulated sector and need to convey a solid image of reliability and trust, it’s vital that they manage their accounts in an accurate and professional way.
With accounting software, law firms of all shapes and sizes can achieve this. In our guide, we explored what accounting software is, what it does, and what kind of benefits you can gain from using it. We also provided six tips to help you navigate the crowded world of accounting software and pick the best one for your company.
By following our advice, you’ll be in a great position to help your law firm get – and stay – on top of its finances, remain legally compliant, and prosper.
