Attorney Books Deep Dive Client Pricing

Hey there, Linda Artesani, Artesani Bookkeeping. This week we're going to deep dive into how do you do a file review and how do you know how to price it? Because the pricing part's hard, right? I've been doing this for a very long time. Not just, you know, the law stuff's just been fairly recent in the last few years, but the deep diving into a file, I've probably made every mistake you could where I'd be price it and then discover maybe there's a bunch of things in undeposited funds, or price it one way and not notice that there's a lot of things hanging and not reconciled, even though the books were reconciled. So those are 2 of the places I've discovered the hard way. So I'm going to share my screen. I'm going to take you through the steps. We now have really amazing tools inside of QuickBooks Online that you can use to— they've pretty much stepped it out. So years ago we didn't have this, and this is just a wonderful— there's a couple of wonderful features inside of QuickBooks Online that you can really use to your benefit when you're doing customer pricing. Let me share my screen. So typically my first stop would be to come up to these accountant tools and pull up the report options, because if I'm doing the scope on a specific date or time range, I don't want to look too far into the past. I want to keep my scope exactly where I'm— where the client wanted me to look at. So if I'm reviewing books for 2020, I really don't want to go past that scope. So I'll put it in here. I will typically, if they're cash basis, I'll throw it into cash basis to see. Most clients are cash basis, and I've got plenty of videos and articles that will go into what's the difference and all that. I'll come here real quick to see when was the last time things were reconciled. This file is actually not that bad. The, you know, the business account was reconciled. Petty cash, I hate to see petty cash, but that's reconciled. The trust bank hasn't been reconciled since 8/31. So red flag number 1, not been reconciled. Advanced client costs haven't been reconciled since 7/31. Well, I got to give them credit for at least doing it. Sometimes you don't see that at all in a file. It's never been reconciled, and then you have to figure out your, your point of when you're going to work on it. MasterCard's not completed, so it might be that that one goes back. So somebody's neglected to do the credit card. And then you can see here that these have never been reconciled. Payroll clearing is zero. My next stop would be to the overview screen. And they're just going to take a high-level view of what's here. How many transactions are not reconciled? That's what I mentioned earlier. This is one of those spots that if you didn't see it and went into each section, you wouldn't see that. You would see these hanging and be like, why are these here and why didn't they reconcile? Maybe they're dated and they should have reconciled the next year or the next, you know, in January. But maybe they're just old lingering things that, you know, you're going to have to clean up, that they're sitting there, that it might be duplicates and maybe multiple reasons. So you definitely want to look at that. Petty cash, you know, has one transaction unreconciled, and that just could be because it hasn't been reconciled. Well, it was actually reconciled on 12/31, so it's not too bad. Visa card not reconciled. You can see there's still transactions sitting in some of these. Trust account has 56 unreconciled transactions. And there's a few other bank accounts that haven't been reconciled. There's a clearing account with $120,000 negative in it. That's probably an issue because clearing accounts should always end up being zero at the end of the day. Then we'll go to the month-end review. So that's another place that I like to head over to that gives me a lot of information that I can see. I can look at the transaction review and see if there's anything in here. Nothing in Uncategorized, that's amazing. Transactions without payees, there's nothing to review. And then you could look into these things like check for transactions without receipts. You know, they'll be in here. Check for personal transactions. So you can, you can start to look into these places and target an account. Personal transactions, you might want to, you know, just take a look and see what you can find. And you can look for an item, and maybe there's an item inside of QuickBooks that will tell you that that's what there should go, that should go. Undeposited fund account, you want to definitely look into that. And any of these things, get your bank statements. If your bank statements are here, you can actually pull them into QuickBooks. and have them right there handy, especially if I have a staff. It's nice to have them there. Next up will be into the financial statements themselves, and that's why I did that date range. So I'll be able just to pull up the typical ones that I want to see. Balance sheet, I'm going to bring up here, and I want to just sort this because it's a law firm. I want to sort it by, um, I want to sort it by the months. Run the report. And then I want to come in here and kind of collapse some of these items that I don't want to see so I can take a look at the trust account to see if this is going to align. So I'm going to close— there's 2 trust accounts, so that's a problem because there's $10,000 put in here. We have to figure out why there's 2. Sometimes there's 2. So if you're using LeanLaw, which they are, and I'm going to take you over there to see that issue, um, if you're using LeanLaw, you want to— if you have like a real estate, if you know, a practice area which is real estate and also maybe just estate planning or something like like that, you want to separate those because if there's 2 bank accounts, you want to have 2 separate liability accounts. That's key. We get down into here where the trust accounts are, and then we're just going to take a look. We can see that the trust account here has $66,468 even. And up here, the trust accounts, because there's multiple here, $19,040. So— oh, there's also $69,000. So we'd have to add the 2 balances together to see if that equals, which we know it doesn't by just looking at it with the naked eye. So we've got issues right away in January. So now I'm going to have to tell them that it didn't balance. And I might take a cursory look, maybe it's one little thing that I can fix. But if it's not that, then I need to make sure that I reach out to the client and say, look, your IOLTA is wrong. I can't make it balance to January— to December 31st, 2019. Here's what it's going to cost me to go backwards to figure that out. But it's— that's like, I just pretty much stopped my scope review before I get too deep into it, to let them know that, you know, I do this hourly and, and this is what I'm going to have to look at to do that. You can see here that the balances here are kind of funny. It doesn't look like there's any transactions in the credit card, just the payments. You want to find out if it's not hooked up why you're missing all the transactions. And we want to get them in. You can probably bring them in from the bank feed back to last year. If not, you can always go to the bank and download them and pull them in. That's pretty much where I would start. I would get into here to see if there's any money in opening balance equity account. Yes, that's there. I'm going to grab their tax return and tie their books to the tax return on the, on the 1st. So that would be another step in my, my journey here. We would go through the owner's draws to make sure that this is correct for the client when I get to that part of the engagement. Also going to go over to the profit and loss. So really going through this very quickly. Obviously you would do it a little bit more than that. I'm going to look to see how things look. And sometimes I like to go into the report section, I like to do a comparable to kind of see if anything just looks really odd and different. So I'm going to look here and see, well, they're way down in sales, but it was, you know, 2020. So there could be a very valid reason, maybe the courts weren't open and they didn't— they weren't able to process their sales. And I would just look to see how things align, right, to see if Percentage-wise, and you can add a column for percentage, is there differences and reasons behind it? Why, you know, maybe last year was really difficult from with them. So you want to get some conversation going with your clients so you have an idea of what's happening in their world, of what differences. And they generally will tell you this when they call you to try to get pricing on fixing a messy file. Maybe this file is bad because the client couldn't afford to keep a bookkeeper on staff and did the work themselves last year. We have seen that because of COVID they weren't able to go to the— go to court, and this can be a thing. You can just come through here and just look, look at staff. You can see right here, office staff was this and this, this year. So there's a lot different. Wages unbillable, not really sure what that is. We'll take a look at that. Obviously, there's something in uncategorized expense. Oh, and all this file doesn't have a lot of mess that I typically see, but this is, this is what you're looking at here. So that's really a really fast view of where I would go looking. I would also for sure grab this because, as you know, I've said this so many times, this is a major sticking point with clients. They've got this money, it's just sitting there waiting to be collected. You could jump in here, maybe hire an outside firm to do the collecting for you. You could be the hero for the client that's struggling with cash flow. Because of COVID and help them get some money into their bank account. That's a way to really work your, work your job, become that trusted advisor. And if you have that ability to do that and help your client even get a better workflow with AR. And I have lots of articles in here about attorneys and accounts receivable and why it always seems to be a very large amount in the 90-day count. column and how you can help them improve their workflow. So many ways with QuickBooks and using workflows and doing things for them that can help improve it, just analyzing the way it's done now and making improvements so it's a sweeter workflow. So on that note, I hope you all have a wonderful, wonderful week. I hope that helps. If you need more help on this kind of a topic and pricing— so with pricing, you're going to look at it, take that look and see all that's involved, and then put a price together. Sometimes I sit on the price, I sleep on it, and the next morning I'll get up and I'll throw more into it because there's so many unknowns, especially when you get into digging into the IOLTA. If the IOLTA is already broken from the beginning of the year, you're probably going to have a lot of brokenness during the year. So know that that's also a factor. And usually I'm— I'll put a price that I think is reasonable for a client, and then sometimes I'll go back and say, you know what, there's probably more here than I know, and I really want to go ahead and Just raise it up a little bit more and look at whether or not you're really busy. If you're super, super busy as an accountant or bookkeeper and you're like, I really can't take on another client, or I'm looking at further down the road, add some more to it, increase it, see where your level is, test the waters. What do you have to lose? If you're that busy, you don't have anything to lose. So on that note, I hope you all have a wonderful, wonderful week. If you are an accountant or bookkeeper and want to join our group, we have a private group called the Accountants Law Lab where we meet once a week and talk about topics just like this. This one came from that group. We also have a Facebook group, Accountants Law Lab, and I have another Facebook group that's quite robust, and that's QB Community Live. And we talk about everything to do with accounting, bookkeeping. So if you're that generalist that may have stumbled on me from a law— to have one law firm client, highly recommend you join our group, QB Community Live. Thanks everybody. Bye now.