Tracking Trust Credits and Debits with Legal Accounting Software
Trust account funds must be managed and maintained separately but it is neither practical nor cost effective to open separate accounts. One reason for this is the need to receive or remit monies on multiple matters in one check. Easy TimeBill attorney time and billing software with the optional Easy Trust module allows you to deposit or withdraw funds at the matter level while still minimizing the number of transactions between your practice and other entities.
As an example, let’s say you manage an escrow fund that is an interface between insurance brokers and an insurance company. Each matter needs to be administered separately and yet the insurance company isn’t going to want to deal with multiple checks. So if 100 brokers each make a premium payment, you deposit the premiums into the escrow and then write one check to the insurance company. In the process you need to be able to look at each individual broker account in the escrow software and see both the deposit and the withdrawal.
Separate Accounts Make More Problems
Some practices try to maintain a bank account for each escrow, believing that will prevent accidental payments of one matter’s expenses from another matter’s funds. While this might seem like a good idea, in practice it is an administrative nightmare. In the example above you would have to write 100 checks to the insurance company, one from each account. Although the record keeping would be easy, the cost in both time and materials to create, print and mail 100 checks would be unreasonable.
One Account, Multiple Matters
If all your trusts are in a single bank account then, after depositing the premium checks from the brokers, you can write one check to the insurance company. Would that make tracking each separate trust impossible? Not at all.
Managing multiple matters in a single bank account is easy with legal billing and accounting software. You can view the account as a whole but you can also view each matter’s transaction as though it were a distinct bank account. When you enter a withdrawal into Easy Trust, you select the matters that the monies should come from. You can either enter distinct amounts for each matter, or apply the same amount to all selected matters with one click. You can even select “All” to easily deduct funds from all trust accounts.
In reality, law practice management software actually makes it easier to administer a single escrow account with multiple matters than to manage separate accounts. Try a demo of Easy TimeBill and Easy Trust, or try the full products risk-free for 30 days so you can see how simple trust management is with the right tools.