How to Keep Up with Your Accounts Payable

Your Accounts Payable keeps track of all your law firm’s bills/expenses and when they need to be paid. We highly recommend going over your accounts payable once a month—this gives you a clearer picture of where your firm is financially.

Running a law firm involves a lot of moving parts, not least of which is keeping up with your expenses. Some are consistent, like rent and utilities; others fluctuate every month, like business expenses. 

Optimizing your monthly profits means accurately budgeting your expenses and making sure there’s no surprises. The best way to do this is by carefully tracking all of your bills.

Sorting Your Bills

Keeping track of all your bills is the only way to make sure your payments are accurate and timely. Sorting your bills is a helpful way to keep up with your firm’s expenses. Broadly speaking, there are two kinds of bills: monthly and irregular:

Monthly

These bills are dependable: they come out of your account at consistent times in consistent amounts. They include payroll, rent, utilities, and insurance.

Irregular

These are the expenses you know happen every month but can’t know the exact date and amount. Things like business lunches, traveling, and employee reimbursements are a few examples of irregular bills.

Bill Payments

Some bills can be handled by automatic payments. For the rest, you may receive invoices through email or the mail. Be meticulous about keeping track of your invoices and paying them as promptly as possible. You don’t want a bill to get shuffled to the bottom of a stack of papers and forgotten about.

Be sure to keep a copy of every invoice you receive on file. These invoices are not only important records to prove your law firm is current on it’s payments—they are also key to adding up your accounts payable and making your monthly budget.

Adding Up the Bills

Every invoice and monthly bill is a piece in the puzzle that is your accounts payable—only with every expense can you see exactly how much your firm spends each month. Once you know this number, you subtract it from your accounts receivable to learn your expected profit for the upcoming month.

Knowing the financial status of your firm every month is vital to creating your business strategy. Each law firm must grow so they can take on more clients and increase their billable hours. You can’t know your growth potential unless you know your profit.

Increase Your Firm’s Efficiency

Odds are you didn’t go to law school to learn bookkeeping, bill tracking, and how to write up monthly financial reports. Good news: when you hire Brennan Bookkeeping, you never have to worry about accounts payable and receivable again!

Your firm thrives when you are able to devote your time and energy to your clients; we help you do this by taking over bill payments, invoicing, and tracking your accounts payable and receivable.

Contact us today and finally stop spending your time on bookkeeping!