The Best Way to Track Accruals and Why Accounting for Accruals is Important
Tracking accruals accurately is essential to reducing legal spend and to maintaining a healthy budget.
Accounting for accruals allows your team to formulate a more accurate understanding of your legal spend for the coming months, and by tracking accruals, your legal team will have the advantage of knowing the number of fees and expenses and their amounts which your firms will be invoicing you for the following month.
Having a robust way to track accruals is especially pertinent for your finance team and will allow for more thorough and accurate reporting. Accurately being able to see charges that you are soon to be billed for has a host of benefits including:
Intuitive accrual tracker in an ELM solution
An intuitive e-billing and matter management software should include an accrual software feature that makes entering, viewing, and managing accruals simple and straightforward. A few of the benefits you will gain with such a feature include:
- Automated communication with your firms about accruals – this means there is no need for you to keep track of which firms have entered accruals for that month and which have not. Our intuitive system sends alerts to your firms to remind them to enter their accrued fees and expenses at a specified time each month.
- An Accrual Notification Digest which lets you know that accrual notifications were sent out to your firms. The Accrual Notification Digest includes a list of firms and the corresponding matters.
- Enhanced, accessible reporting. The Accrual Accuracy Report allows you to see any discrepancies in firm accruals and follow-up with them accordingly.
- A streamlined process for your finance team. Our Enterprise Legal Management software provides two types of reporting: 1) a monthly report of submitted accruals and 2) a more analytical report that you can use to review accrual reporting accuracy.
Additionally, a solid ELM solution will include a live accruals feature. Live accruals can increase the effectiveness of billing accuracy and significantly reduce spend.
Accurately tracking accruals is important to the overall financial success of your business and is key to reducing your legal spend. With firm communication regarding accrual accounting built into a software solution, the need for your team to manually keep track of firms and their accruals is eliminated, effectively freeing up time and energy for tasks that can add more value to your team and business.