Accounts Payable (AP) is the money your firm owes to others, including vendors, government agencies, and lienholders. It sounds simple, yet it can take a lot of time & effort to manage.
Accurate & timely tracking of vendor bills is not optional for Canadian law firms due to the impact it has on your accrual-based income statement & balance sheet. That’s why CosmoLex is built to do most of it for you…automatically.
Why is Accounts Payable So Complex?
To begin with, there are three basic types of accounts payable: general office bills, vendor bills to be billed to the client as disbursements, and 3rd-party liens on ongoing cases such as personal injury cases. When you factor in legal-specific regulations governing these transactions, you have even more permutations. CosmoLex is specifically designed to handle these legal-specific accounts payable challenges with ease.
General Office Bills
The first thing to consider is timing. You may pay some bills early to take advantage of discounts. You might pay others right on time. You may even want to pay other bills late, knowing that the late payment fee is worth it from the perspective of your cash flow. All of these expenses owed must be recorded correctly on the income statement. CosmoLex does it all automatically. Plus, it can report on how much you spend with each vendor — information you can use to secure discounts or better terms.
Bills from Case Vendors (Disbursements)
This type of accounts payable is even more complex. You need a system that can do these 3 things:
Link each vendor bill to the correct client matter (or multiple matters)
Hold certain payments until the client’s payment is received
Differentiate between bills for client expenses and bills for the firm’s expenses
CosmoLex does all of this for you automatically. It can even remove a “‘hold”’ automatically, once your firm has been reimbursed. Nothing slips through the cracks — and Law Society compliance is assured.
Matter Bills with Third-Party Liens
There is an obligation to not only pay these bills — but to do so at the lowest cost to the client. You need to know when money has been received to cover these expenses — and that these funds have been used to pay third-party claims — before your firm is paid for its services. All of this requires the “big picture total view” that you can only get from CosmoLex — a fully integrated system, built-from-the-ground-up to handle the precise accounting needs of law practices. Learn more about third-party lien claims