Clio and Bank Feed Matching

Hi there, Linda Artesani, Artesani Accounting and The Proper Trust. This week, we're still in the month of June and month of Clio, exploring the features of Clio. And this week, we're gonna talk a little bit about the types of transactions that are created as the attorneys create their workflow inside of Clio. So last week, we spoke a lot about connecting the software and how there's a lot of power behind connecting the software. Power and automation, right? You're using the technology to its fullest benefit. And this week we're going to talk about the types of transactions and what you should be matching in the bank feed. We're going to dive right in here and, and we're in Clio right now. And I can't really show you because this is my demo file from them. They don't have a full working file like I do with LeanLaw where I can connect it to QuickBooks and show you In a test scenario. Here's what the transaction looks like when the attorney creates it, and here's what it looks like in QuickBooks. So you can see, I did take some snippets of some of the data and I kind of manipulated it, so I wiped out whose it was so that way you can see it in the picture form in the blog article. But I just don't have the ability to show you this because this is not connected to any QuickBooks account. So what I wanted to show you here, this is in the Clio side. And then One of the places we spend a lot of time in is in going into accounts. So when you see the little bank, that just means it's a bank account. So we're in the bank account. I actually pulled up the test account so you can see that they had some money coming out of the trust account and money coming in. And then you can see where this money in the trust account was transferred to IOLTA. So when you see this, you're going to see that this money transferred from IOLTA to operating. That is a transaction where— The attorney already received a retainer. The retainer is sitting in the account, and then as it sits in the account, they've now earned some of the money that they were pre-billing for when they got their retainer, when they, when they got the deposit up front. And now they've created an invoice and they want to get compensated for the time they've spent. So the attorney creates the invoice. And then takes the retainer money and applies it. And this is one of the transactions that you'll see in Clio. Now, in QuickBooks, it's a little different. What I want you to understand when you see this in QuickBooks is you're going to see 2 transactions. So this is how you're going to see it in the view. Remember, if you're missing a transaction when you're working with a law firm and it's not showing up, you see money arrive inside of the trust account or money arrive inside the operating bank account and you don't have a corresponding match in Clio, you're going to have to go back to the attorney and say, hey, I received money inside of the IOLTA. Did a client pay you? And if you have access— one of the things I want you to be cautious about too, so you're not bothering the attorney because they're really busy people— you have access to their merchant account. And you can see that it's a merchant payment that came in. The client paid with a credit card, maybe with Gravity, maybe with Clio Pay. You want to make sure that you go into those, those accounts and look to see. One of the things we see with Clio and with LeanLaw, actually, if somebody has a link on their website, you'll see this more with family law firms where— or immigration firms, they are trying to collect the money up front and they have a pay now link on their website and it allows the client of the law firm to pay the law firm some money, but there's never been an invoice. There's no other associated invoice attached to it. So what will happen is it will come into the merchant services account and then it will get— you'll see it, the money hit the bank. But there's no way to connect them because Clio can't recognize a transaction where a client paid. I don't know why this is because it would be great if they created a sales receipt for it, but they wouldn't know where to put it. And that's probably the reason why it doesn't have a home. So if you see money come in, Before you bother the attorney, go back to the merchant account, especially if it's a merchant transaction, and look and see if somebody paid them on the website. They paid them for something that hasn't— maybe they're prepaying for something, giving a retainer, but they don't have— the attorney hasn't initiated that on their end and sent an invoice out to the client. So that's something you might see. Now, another thing that you will see, and that's one of those missing transactions. So sometimes The attorney will get paid. Maybe the person walked in the door, immigration firm person walked in the door, wants to become a citizen. They sign up, they pay a retainer. The attorney is not going to turn that money away. They're going to collect that money. But if they forget to go and do the invoice part of receiving the retainer, again, same scenario. You'll see it hit the bank account, but you won't see any transactions in Clio. And you're going to say, what is this money for? Especially if it's cash or, you know, if it's credit card, you might have it, you'll get a name. But in immigration attorneys, that name might not really be the name that goes with the client. So you always have to double-check that. Now, when you see that, you gotta go back to the attorney and say, what is this? And then they will have them and tell them, because you're using Clio, you don't have your own login. You'll have to tell them or instruct them, I need you to create an invoice for the transaction, the receipt of retainer, and put that into Clio so that it will push across. Then you'll have a way to match it up. So don't enter it out of the bank feed. Let it sit there until that transaction happens in Clio when it pushes into QuickBooks. So you can match them. We've had it happen sometimes where we find it, maybe we're doing the client's work weekly and the month is closed and you gotta watch your dates. Sometimes the attorney will rush in to do it, not put the right dates. So you have to make sure that the dates in Clio are correct. But again, because we don't have a login, we never, ever, ever touch Clio. We have the attorney do the work inside of Clio and that way they are only touching it. We don't wanna ever touch any of that work in there because we don't have our own login. There's no way to track who did what and we never wanna have any issues with the law firm or the attorney. attorneys that you entered this on my behalf. We just don't touch it. If we had our own login, that's different. Like with LeanLaw, we have our own login, we can go and do that. But with Clio, we don't. So you make sure you put that as a policy in your firm, even with your staff. Never, ever, ever put a transaction inside of Clio unless you have your own login. I recommend asking the attorney to pay for it. It's not really that much money and they might get tired of having to do all this cleanup. And then if they give you a login, especially if it's a bigger firm, I mean, they should really be giving you a login so that you have the ability to help out and get those transactions in right. It's gonna save a lot of their time, well worth the seat for them paying for it. Now, if the client, getting back to this, so if the client paid a retainer, it's gonna show up as a deposit in the trust account and Clio's gonna create that exact same transaction. You might see it in the deposited funds account and then you wanna drop it into, Into, into the bank that it belongs into and then match it so that it'll see in the names. You really want to get the attorney, especially some of the bar rules. You really have to have the names really predominantly stated. So make sure that those are on all the transactions. It's great to see that in the bank feed, and then you can match the transaction. If you're working for family law or immigration, there's a lot of transactions that are $250, $500. You're like, who does this belong to? That's why it's super important to have all that on the data that comes in from the bank. Now, if we go to— let's go back over here to accounts and we'll go back to like an operating account. You might see this happen sometimes where the attorney will— it's operating accounts, not very good. This attorney, this is a demo partner account, so I don't— it looks like people have made their own accounts in here. Harry Potter. Let's just take a peek at Harry Potter. He only has a starting balance, but not a great account to go for. Just trying to find a good operating— ARCC Accounting. So if you find that you have a— You're looking at the bank feed in QuickBooks, for example, and all of these are in the notes inside of the article. So you're looking in the bank account and you see money land in the bank account. and you don't see the money with a match in QuickBooks, don't— QuickBooks is going to say to you it's a transfer from IOLTA to trust, from trust to operating, and it will suggest that, or it'll suggest it's a transfer to uncategorized asset. The suggestions in QuickBooks bank feeds, I wish I could tell you it's a perfect world, but it's not. So be very cognizant of the fact That you're going to be looking at transactions sometimes, and maybe the attorney paid themselves and didn't do the transactions in Clio. So then you're gonna have to go back to the attorney and say, hey, this money came in, it says it belongs to, you know, Harry Potter. I don't see it in Harry Potter's account. Can you— is it Harry Potter's money? And if it is, can you please create the invoice, record the payment, So the trust money goes to operating. So never, never, never match it. This matching should always happen with physical bank matches. It shouldn't actually have you have to enter a transaction. If you're entering a transaction that has anything to do with the client side Clio, don't enter it, match it. The only other time you really have to really do the entries is for the IOLTA interest clearing account. You should not be entering transactions. We never realized that this was a thing until, you know, we started working with our staff and we started training them on the software. And we noticed that they saw that— they saw it was a transfer from trust to operating. So they're like, oh, it's a trust. And QuickBooks says it's a trust. QuickBooks is the source of truth. In this case, it's really not. So you have to make sure that you're careful with that. So remember, and I'm going to start to slow this down here. But remember, I wish I could show you inside of QuickBooks what these transactions look like. You're going to see journal entries. Clio uses journal entries just like LeanLaw does to show the movement of money out of the trust IOLTA account, the subledger account, and then the movement of the money to reduce it to— you're moving it into legal income. So these are transactions. There's the transaction, that's the journal entry that you're going to see it come out of the Out of the trust account. You'll see it reducing out of the trust liability account. So you're going to see the opposite of what happens in a retainer, as well as seeing a customer payment because an invoice is going to be created in Clio. On that side, you'll see the invoice, you'll see the customer payment, you'll see the deposit in the operating. That's the other side of the transaction. So it's a 2-part transaction. But remember, you're going to see 2 pieces of that. So even though it's a trust to operating transfer, there's 2 transactions, a journal entry and a customer payment. One side hits the trust bank account, the other side hits the operating account. So it's a 2-part transaction and you're always, always, always going to match them. Now, this seems like a lot, especially if you're an attorney and you're trying to do this yourself. Feel free to reach out. This is work that we do and we love doing it. So feel free to reach out to us and we will help you with this workflow. We can either train you or help you and actually do the work for you so you can do what you do best. If you're a bookkeeper or an accountant and you want to learn more about this software, we definitely talk about this in our Accountants Law Lab group. So reach out and we'd like to have you join us and we can dive into this and actually do one-on-one training with you. So on that note, I hope this was helpful, and we will see you all in the last week of the Clio journey. Bye now.