Should I use QuickBooks for Billing? Updated

It seems that everyone is striving to simplify, and this frequently leads to the questions “Why do I need a separate billing program? Can’t I just use QuickBooks for my billing?” Generally speaking, I answer “That depends on your business and your needs but, for most legal firms and many professional service firms, the answer is no.”

While QuickBooks has many good points, when it comes to professional services billing and reporting it has many limitations. These can be addressed by add-ons or in some cases, a work-around. Each firm is different so determining whether QuickBooks will work for your firm’s billing requires you need to understand your firm‘s needs and know what QuickBooks can’t do.

The first thing that is most critical for many law firms is that QuickBooks cannot automatically show Trust activity on the bill. The only way around this is to enter the transactions onto the bill which is complicated and can lead to errors. Additionally, while QuickBooks can be setup to track trust fund balances, it is up to you to manually ensure you don’t overdraw the trust account for any individual client. Given the high penalty of this action, do you want to depend on manual checks?

Another area to look at closely when choosing a billing solution is how you setup your rates. If you have QuickBooks Premier you can setup billing rates for a vendor or employee. If your rate varies by client you might be able to use price levels, however only percentage-based price levels will work correctly. Alternatively you can setup unique service items but this requires ensuring that the time entry person picks the correct item and the list can get long and difficult to manage.

Do you need or want subtotaling on your invoices – time vs expenses, subtotals by timekeeper, or totals by activity? You can manually insert subtotals on the invoice but it cannot be done automatically. Additionally there is no ability to create a timekeeper summary table, a popular feature with many professional services firms.

If you have a need to sort the entries on the invoice in QuickBooks in a particular fashion you must either type them in or choose them one at a time, there is no sort capability. There is also no easy way to show the timekeeper who did the work on the invoice.

If you bill clients for soft costs, those things for which you don’t write a specific check, there’s no direct way to track and bill customers. Additionally users cannot choose to allocate payments to expenses, fees or specific timekeepers. If the client pays part of the invoice balance the payment will be allocated proportionately across the items on the invoice.

While QuickBooks has a batch billing capability, you can only use this if you are going to bill the clients exactly what is on the bills automatically, there’s no ability to edit as you go. QuickBooks also does not have a pre-bill capability. If you generate bills and include time and costs and then choose to remove those entries from the bill or undo the bill, the entries do not return to billable status.

QuickBooks does not have the ability to do electronic billing like Ledes or Litigation Advisor. QuickBooks also does not have options to setup flat fee, split billing or consolidated billing arrangements for different clients or to assign different bill layouts to different clients.

When you choose a billing solution you also must look at the types of reports you will need to run. Will you want to see profitability on flat fees? Do you need to know revenue by timekeeper or responsible attorney? Whatever product you choose, make sure it has the ability to produce the reports you need.

Many billing systems offer integration with QuickBooks. If this is important to you it is essential you understand how they integrate and what they offer. Don’t just accept “we integrate with QuickBooks”. It is important to test and to talk to those using the product to understand what does and doesn’t transfer and how it transfers.

Can I use QuickBooks for my accounting needs? Probably. Should I use it for my billing? Probably not. While it is up to you to determine the best answer for your firm we are available to help. As an Advanced Certified QuickBooks Professional Advisor and a certified consultant on multiple billing solutions, we are happy to help you determine the best solution for your business. We specialize in helping with links and have developed guides for the links on several products. Call us at 203-254-7736 for your consultation.

Comments

  1. Thank you for the help with QuickBooks billing as many of our lawyers have had questions pertaining to managing their client’s trust accounts. If you would be interested in a guest post on our site, let us know!

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