Tips to Manage your Law Firm Accounting with the Help of QuickBooks Online

Hi there. Lynda Artesani, Artesani Accounting. This week we're going to take a little pause from talking about the accounting conference and talk a little bit about the accounting software. So our favorite accounting software is QuickBooks Online Advanced. We help attorneys move off of antiquated systems to this software. We help you stop the spreadsheet, as we like to say, and get you onto this platform. And I honestly have to say, even if you're just starting out in your practice, I highly recommend don't even go towards starting out with using a spreadsheet. Go right into the software. Because if you start out with a spreadsheet and you start to grow your practice, you start to get really busy, it becomes really quickly— it becomes unmanageable. So your best avenue is to start with the best and really dig yourself in. You know you're in business to do well, and you probably can feel that the business is there when you're first starting. Or if you're an attorney or a law firm that's working, you know, work at a law firm and you're working with some software that's from like the 1980s and it's desktop and it's clunky and it crashes, this is when you want to really start to consider moving to the cloud, moving to the future, and working with software that's going to fit your needs, especially if you're on the go. QuickBooks Online Advanced is the one. So I get asked a lot, why would I want to put you in QuickBooks Online Advanced over putting you into QuickBooks Plus Essentials or Simple Start, because that's the different products that they have at QuickBooks. The reason behind that is the reporting. So as you start to grow your firm, you want to grow smartly. And in order to do that, you need to have the data and the metrics in place. And this product by far, hands down, has everything you'll need right inside all bundled up in a beautiful package. So I'm going to take you to QuickBooks Online Advanced in my demo file and just give you a little tour of what's there and why you probably need it. And I'll take you through Fathom, which is the reporting tool that's also inside of QuickBooks Online Advanced. Let me share my screen and we'll dive right in. So we're inside the demo law firm, and this is definitely my demo file. It's actually— I need to update some of the data. It's a little bit on the older side, but I'm going to just take you through the pieces that we have in place and show you why this software is the best, hands down. So one of the things I wanted to talk about is QuickBooks is made for all types of businesses, from the landscaper to the pool guy to a nonprofit to any kind of firm. QuickBooks is a product that works with all different industries, not just legal. So how do we make QuickBooks more specific to law? We add an app or software onto QuickBooks, one that integrates well with QuickBooks, which my preferred one is LeanLaw. We also use Clio. And those 2 softwares work the best with QuickBooks. It's the reason why LeanLaw is called the premier app. It works the best with QuickBooks. Now, it's the part you might say, well, why do I need that? Well, you're going to need that for tracking time. You'll need that for tracking metrics inside the program. So even if you're not time tracking, even if you're just doing fixed fee billing, subscription billing, evergreen billing, there's parts of the program that are going to work way better tracking trust, tracking maybe expenses, advanced client costs. It's going to save you a lot of time. Now, QuickBooks Online Advanced right now costs $180 a month. We do have a link in the YouTube video where you can get that through us for half price. But I wanted you to know that this is— there's reasons behind the cost of it because there's so many things in here that are going to save you time. So if you're an attorney that charges $350, $450, $550 an hour, you know, what is an hour of your time worth? Is it worth getting this extra bells and whistles in in your software. It definitely is. Now let me just take you here on the toolbar. So you'll see here over on the left, I have HubSpot integrated. So HubSpot is an app that you can track your clients from the minute they come to you, from however— phone call, email, walk in the door— you track them. Now HubSpot, as you can see, is right on the toolbar because I've integrated the product. You can also get Salesforce, does the same thing. And Salesforce has a deal right now, it's $99 a month that you can track your clients. Why do you want to do this? Well, you want to track your clients, where they came from. You want to know where your marketing efforts are working. You also want to track— you want to track where they come from and how they get to you and if you actually turn them into a client. And then once they're in QuickBooks, you're going to be able to track that part of how much you make off of it. So if you do multiple practice areas, you're going to be able to track which practice area is working the best, which one's the most profitable. And there's a lot of things and you're probably not even thinking of that you can track. And that's why you want to have that accountant or bookkeeper in place especially somebody that outsources like we do, because we're able to— we work with multiple law firms. We know it works. And we know that these are pieces that you want to track. If you're new to being a business owner, you might not even be thinking of these things because you are probably wearing a hat of the marketing person, the accountant, the admin. I mean, you're probably wearing all the hats, the paralegal. You're probably doing it all. And eventually you kind of run out of steam as your business grows. You can't wear all the hats. So it's important to start to think about Starting with the right software and then starting to, as you layer in, maybe getting that accounting firm that will come in and help you navigate the waters of compliance with your trust accounting. And that's the other reason why you want an extra software like a LeanLaw or a Clio, because they're going to protect you from maybe giving back more money than you actually received, or God forbid, if you're not tracking it, you fall out of compliance because your trust account becomes unbalanced. It's very easy with the software to keep the trust account in balance, in compliance, if it's set up properly. So getting back to the reports. So this is the main reason for this, this particular video is the reporting. I want to show you with Advanced what you get. So I'm going to click Reports. And then we're just going to come right into the Performance Center right away. So the Performance Center is part of QuickBooks Online Advanced, and it gives you a high-level view of Some of the insights. You can look at revenue trends, you can look at expense trends, gross profit, profit trend, where obviously you don't want to see that red with the down arrow. You want to look at— you can select and make these on your own. So we have a lot of different charts that we can create. You have up to 25. I just have 15 here, and I did quick ratio, year-to-date net income, you know, your expenses last year. You can see who's doing the best by attorney because we have class reporting on here. So we track by attorney. Accounts receivable, always a sticky point for attorneys. We find that a lot of law firms have tons of money sitting in the over 90-day category. They just get so busy, they don't track their— they don't really track, you know, where they're open. They have people who owe them money. They don't track it. They don't follow up. So if you hire a firm like ours, we'll be able to actually help you bring that money in the door. But QuickBooks Online Advanced also has workflows where you can automate some of these pieces, especially if you start to send invoices out via email. We all know what happens. Emails get stacked, they get lost, they get read but forgotten. This will help automate a system, a series of emails that will go out. You know, your invoice is due today, your invoice is late. So you have the capability to really refine and fine-tune this, and it's automated. So now, if even if you have a firm with multiple people working in there, you don't have to have somebody on staff do this tedious job. It's handled inside the platform. There's your automation, your machine learning. You're actually setting it up and it's your AI, right? Your artificial intelligence at work doing the back work for you. So as we go through here, you'll see accounts payable aging as of today. And I just created some different charts so you can see net profit by time, expenses by time, gross profit by time. So you can see here cash flow and then industry benchmarks, which I think is really— if you set it up properly in QuickBooks, you're able to track how well your firm's doing as opposed to other law firms nearby. So you can gauge where you're at. And that's a really important piece. Now I'm going to pop back over here to the Report Center. And then you can see here we've got our generic reports, but you have this piece in here. You have Smart Reporting by Fathom. So I already have Fathom open, but you would just click this little box, but to save time, I'm going to pop over to Fathom. And I just came over to their reporting and I created a report. Let me go back here. So I'm going to go back to reports. So all I did was we have different places you can pick analysis. I've already set up a report in here. I have a KPI analysis report, revenue analysis. I'm going to go through the monthly performance report because that one's pretty much already preset with some KPIs and things that we've already set up. It's easy to set up. Once you get the settings in place, it's very easy to track specifics in your, in your firm. So let's just go into this report. This is back for November '19 because this is when I have a lot of data. So at a high level, you're able to see, and I think this is one of those reports that's really wonderful to have if you're a mid-market firm, you have multiple partners. Every month you have maybe a financial meeting and you'll go over how your numbers are for the prior month. So, you know, your revenue, you got the thumbs up, you've profitability. You want to see a lot of these thumbs up as you go through. Cash flow's up, marginal cash flow is down, and the net variable cash flow is 159.45%. So you're starting to see there's some little bit of issues here. And then you can edit any of these as you go through. So KPI results, I try not to— I have some clients that just like kid in a candy store, I'm going to track this, I'm going to— and they get crazy with the KPIs. So a KPI is a key performance indicator. Part of your software, part of your business you want to track. You could track how much money you're spending on auto, maybe how much money you're spending on parking, maybe how much money you're spending on marketing. There's lots of areas in your firm that you can track. So this is just a few of them that I selected. Try to pick 5, 6. Try not to go into the 10 range because it gets a little bit overwhelming. It's really hard to find— follow that many KPIs. That's my recommendation. And you can see here, you know, how many are on track, how many are off track. You can set up budgets, you can track what you want to see in budgets as well. And so you can see here, it's going to tell you which ones are doing well, which ones are critical. So you don't want to see anything critical. And then I did include this KPI result so you can see what your target was. So as you can see, my total revenue, my target was $90,000 and I only brought in $14,500. So that's a critical, that's a critical area. I either overestimated, or in this case, maybe it was during you know, COVID and the courts were closed and we couldn't bring any revenue in because that did happen to some law firms. So know that that's something that you might have a reason behind tracking and a reason behind why something's off like that. But it's good to follow and track this stuff because a lot of times we get so busy in our business, we're working in our business instead of on our business. And if you want to grow, you really have to work on your business for sure. You have to really think about doing that kind of work. So you can see here, what I like about Fathom is it gives a very high level. It doesn't go into the details, more of a broad overview, but it does give you information. So if you are just the attorney working on— shouldn't say just— if you're the attorney working on your business and you want this piece, this is really important. It'll help you walk through and it really explains each KPI in detail. It doesn't even touch— doesn't touch upon all the KPIs, but there is a KPI list inside here. It gives you kind of ones that people do use in your industry. So you can look at total revenue. Target was $90,000. Last month we had $9,500. So I don't know why we targeted $90,000, but you can see here that we have increased our revenue from the year before, from the month before. You can see that we also have cumulative revenue. Looks at your profitability, and it actually kind of explains it to you. So it's a great report for a board meeting. And you can see your top 10 revenue accounts. Like I said, this, this file doesn't have a whole heck of a lot of data in it. Top 10 expense accounts, your profitability charts. And this, this is such a big report, and it's really you pick and choose what makes sense for your firm for growth. And then every month you can just produce this monthly report and really stay on top of your finances and on top of the metrics you're tracking. Cash flow, you can see here. You don't want to see red. Green is good, red is bad. You can see here that we have a big decline. It's a different style of chart here. And you can look at your growth, revenue growth, EBIT growth, asset change. So it really— there's so much here. And then you're getting into more reports, what you would typically see with your profit and loss. You're going to really look at the numbers. pretty much summarized. And that's basically what you're looking at when you're looking at Fathom and how Fathom works and the way QuickBooks Online Advanced works for reporting, because that's the number one reason you want to start, start at that top and get in that software from the get-go. I think it will really help you grow your firm. If this has intrigued you at all and you want assistance or help, learning how to implement this in your firm, maybe you wanna come off of a PC Law or a clunky system that crashes and breaks down and costs a ton of money and you wanna move more cloud-based, reach out. That's something we do at our firm. We're more than happy to get your data out of that bad software and into QuickBooks Online Advanced. We are data migration specialists. So I hope this video was helpful. Please give us a thumbs up and subscribe if you'd like to follow us for more videos. And on that note, I hope you all have a wonderful, wonderful week. Bye. Bye now.