Accounts For Your Business

Accounts For Your Business

Nominal Ledgers

As well as running the accounts of your client files, all practices need to manage the accounts of their business.

With Insight Legal, the nominal ledgers for dealing with both your income and expenditure are managed alongside your client files.

For firms moving to Insight Legal with a data conversion from your existing accounts system, we aim to migrate all your existing nominal ledger codes, so you will not have to get used to a different set accounts – which can be reassuring, particularly if you move whilst part way through your financial year. For firms starting from scratch on Insight Legal, you have the flexibility of having your own list of nominal ledgers without having to work to our pre-designated structure.

Nominal ledgers are individual ledgers for things like salaries, rent & rates, software charges and drawings. For firms with multiple offices, you can choose to have either separate sets of nominal ledgers for each branch, or one consolidated list for the practice. In addition, you may choose to attach nominal ledgers to particular areas of law, so rather than just recording salaries for the practice, for example, you could choose to have different salaries nominals for staff in different departments. This way of working with cost centres can provide extremely detailed reporting and analysis, not just for the firm as a whole but also to help you assess the profitability of your various areas of legal work.
Nominal Ledger postings are very straightforward. There are specific posting routines for recording payments directly to or from your office bank, your credit card or your petty cash tin. In addition, you can record journal transfers between nominal ledgers, purchase ledger invoices received and VAT adjustments.
As with all posting routines, the full ledger is available for viewing whilst you are posting, with the projected new balance calculated for you at the bottom of the screen. In fact, it is not just the current year’s nominal entries that are available for viewing, using a simple drop down list, you can choose to look back at the financial entries for any previous year too. A significant advantage after year end when your ledger balances have cleared down and you are asked how much was paid for something last year!

Purchase Ledger

The function of the purchase ledger is to enable firms not just to record their expenses when payments are made, but also to record their liabilities. This means that when you receive an invoice for, say, your telephone bill or some Counsel’s fees, you can still record it even though it is not yet due for payment.

The purchase ledger works alongside both the nominal ledgers and the client ledgers, so whether the invoice you have received is for a disbursement or one of your own expenses, it can still be posted.

This method of posting invoices gives you a number of advantages over simply recording payments when they are made. For example, a purchase ledger liability figure is maintained on your balance sheet so that you can see not just what you have paid but also what you are due to pay.
In addition, a full and detailed history for each supplier is held, meaning that you can tell at a glance what you have paid to whom. You can also, at any time, run reports to show you what has been paid or what is due to be paid to any of those suppliers. Using a purchase ledger is not compulsory of course and many firms choose simply to record payments when they are made, but with the option of a purchase ledger you have the additional accounting functionality should you require it.

Chart of Accounts

Integral to the nominal ledger structure is your Chart of Accounts. The chart of accounts controls how your nominal ledgers are organised, so for example you will have different sections for your profit & loss and balance sheet, then within those you will have different ranges again such as office expenses, motoring expenses and fixed assets.

Insight Legal allows firms to completely customise their chart of accounts, whilst also having the convenience of having a standard chart of accounts within the system when you start, so it can be used straight ‘out of the box’.

Profit & Loss and Balance Sheet

There are many reports in the Insight Legal system dealing with nominal ledgers, but amongst the most widely used are the Profit & Loss and Balance Sheet.

As you might expect, Insight Legal feeds information directly on to these reports from the various different nominal ledgers and control accounts. This means that, at any time, you can get an up to date analysis of your firm’s day to day performance as well as the assets and liabilities that make up the balance sheet.

These sorts of reports are usually run for either the partners of the firm or for the accountants, so you will be pleased to hear that these reports can be run at any time and for any period. What this means is that you don’t have to spend hours at month-end or year-end running off these reports before you can close the period and perhaps start entering transactions for the new month.
Within each of these reporting screens (and in fact the same is true of other reports such as the matter listing and the trial balance), you have the option of running the report to a specified date or period. This means that any files opened and transactions posted after the date of the report will be excluded, giving you a true picture of the accounts of your business at any time.

VAT

For any practice registered for VAT, producing your quarterly or annual returns is a vital part of your business process.

Posting entries with a VAT element to them is very straightforward. You can maintain a list of all required VAT rates in the system, so it is as simple as selecting the required VAT rate from a drop down list as you post. You can also add to those lists at any time, so if the VAT rate changes then you can continue to work seamlessly without having to wait for updates from us.

With Insight Legal, you can set whether you operate on a bills issued or cash received basis, which in turn ensures that your various reports are calculated on the correct basis. For firms who work on a cash received basis, you can continue to post your bills when you issue them and your purchase invoices when you receive them, safe in the knowledge that Insight Legal will only update the VAT return and liability at the appropriate times.