Outsourcing Bookkeeping for Law Firms: Key Considerations for Choosing the Right Bookkeeper
Written By Geoff Burns
As law firms strive for efficiency and cost-effectiveness in their operations, outsourcing bookkeeping has become a popular choice. By delegating financial tasks to an external bookkeeper, law firms can free up time and resources to focus on their core legal services. However, not all bookkeepers are created equal, and it’s crucial for law firms to carefully consider what to look for in a bookkeeper when outsourcing. In this article, we will explore the key considerations that law firms need to keep in mind when outsourcing bookkeeping, including the essential qualifications, expertise, and trustworthiness of a bookkeeper.
Qualifications and Credentials: The Foundation of Reliable Bookkeeping
When outsourcing bookkeeping, law firms must prioritize a bookkeeper’s qualifications and credentials. A qualified bookkeeper should possess relevant certifications or other recognized professional designations. Unlike accountants, bookkeepers are not required to have specialized certifications in order to conduct business. Bookkeepers who choose to seek out accreditation are often a better choice. These credentials demonstrate the bookkeeper’s competence and adherence to industry standards. Additionally, a bookkeeper with prior experience working with law firms or legal accounting is a plus, as they would be familiar with the unique financial requirements and regulations of the legal industry.
Expertise in Law Firm Accounting: Understanding Legal-Specific Financials
Law firms have unique accounting needs that differ from other businesses, and it’s crucial to choose a bookkeeper who understands these specific requirements. A bookkeeper with expertise in law firm accounting will be well-versed in legal billing, trust accounting, and client cost accounting. An understanding of legal-specific financials ensures that the bookkeeper can accurately manage the law firm’s financial records and provide reliable financial reports for decision-making. IOLTA/IOTA and other trust accounting experience is crucial, especially for law firms that hold client funds in trust, either as retainer or escrow.
Legal Practice Software: The Tech Stack that Simplifies
Outsourced bookkeepers should have a healthy understanding of the software options available to law firms. Although experience in several is not needed, a quality bookkeeper should be able to use existing software or be able to advise on potential options to fit the needs of the law firm. Not all law software is created equal, and all-in-one options are quickly becoming obsolete. A quality bookkeeper can advise the law firm on how to select the right software for both current and future needs.
Trustworthiness and Confidentiality: Safeguarding Sensitive Financial Information
Law firms handle sensitive financial information, including client billing details, trust account transactions, and payroll data. Therefore, trustworthiness and confidentiality are paramount when choosing a bookkeeper. Look for a bookkeeper who has a track record of maintaining confidentiality and safeguarding financial data. They should also have robust data security measures in place, such as encryption protocols, password protection, and regular data backups, to prevent any unauthorized access or data breaches. Proper candidates avoid the use of email for transmitting sensitive information. A potential bookkeeper should have access to a secure file sharing system that protects both the law firm, and their client’s data.
Communication and Availability: Timely and Responsive Financial Support
Effective communication and availability are crucial factors to consider when outsourcing bookkeeping. Law firms need a bookkeeper who is responsive, proactive, and communicates regularly and clearly about financial matters. A bookkeeper who is available to address any questions or concerns in a timely manner is essential for smooth financial operations. Look for a bookkeeper who is accessible through various communication channels, such as email, phone, or online portals, and is willing to work collaboratively to ensure accurate and up-to-date financial records.
Scalability and Flexibility: Adapting to Law Firm’s Changing Needs
As law firms grow or face changes in their financial requirements, a bookkeeper should be able to adapt accordingly. When outsourcing bookkeeping, consider a bookkeeper who is scalable and flexible in their services. They should be able to handle increased workload during peak seasons or accommodate changes in the law firm’s financial processes or software. A bookkeeper who can provide customized solutions tailored to the law firm’s needs and growth trajectory can add value to the outsourcing arrangement.
Outsourcing bookkeeping can be a strategic decision for law firms to optimize their financial operations. However, choosing the right bookkeeper is crucial to ensure accurate financial record-keeping, compliance with legal accounting requirements, and safeguarding sensitive financial information. By considering the qualifications, expertise, experience, and trustworthiness, law firms can leverage their resources to hire an outsourced, professional bookkeeper who specializes in law firm accounting to achieve better financial results for the firm.