The three-way trust reconciliation is essential. Every jurisdiction requires it, every audit checks it, and every administrator knows exactly how many hours it takes. But while the work is the same every month, the amount of time you spend doing it can change.
This before-and-after walkthrough shows how trust account reconciliation software could speed up your monthly workflow without compromising accuracy.
The Manual Process, Step by Step
As you read through these steps, jot down a note about how long each one typically takes at your firm. This is your time-spent baseline.
- Gather documents. Pull bank statements including check images, trust ledger, and client/matter sub-ledgers.
- Reconcile statement, ledger, and subledgers. Reconcile the bank statement with the trust ledger, and the trust ledger with the client/matter sub-ledgers.
- Hunt for exceptions. Find, investigate, and document any variances.
- Compare all three numbers. Confirm the bank balance, trust ledger balance, and client/matter sub-ledger totals all match.
- Document and retain. Save reports, screenshots, and notes for audit readiness.
The Same Process, Automated with Trust Account Reconciliation Software
With an automated process, the system completes most of the steps for you, so your time goes primarily to investigating any exceptions.
- Ledgers are already up to date. Trust ledgers and client/matter sub-ledgers update in real time as receipts and disbursements are posted.
- Transactions are matched automatically. The system pulls the bank statement and compares it to the trust ledger and client/matter sub-ledgers.
- The three balances are compared. The system matches up the balances and flags any discrepancies between them.
- Exceptions are flagged for your review. The system automatically detects exceptions and flags them for you. Your work focuses mostly on tracking these down.
- Audit-ready reports are automatic. The system generates the report for you.
What Automation Doesn’t Change
Automation cannot replace human oversight, and both attorneys and accounting staff must be involved in the trust reconciliation process for compliance.
- The attorney must authorize disbursements and oversee trust activity.
- Accounting staff must review flagged exceptions (and potentially escalate to attorney).
- The attorney must sign off on the monthly compliance report.
Estimating Your Firm’s Time Savings
With a simple self-assessment, you can make an informed guess about how much time automation might save. This can help you make the business case for automation.
- List the manual steps you perform.
- Write down how long each step takes.
- Multiply by 12 for your annual reconciliation workload.
Different legal automation software products will require different amounts of work, but you can expect major labor reductions in document gathering, the reconciliation itself, and documentation generation. Exception tracking will still require staff time.
When attending product demonstrations, you can ask the vendor to run a live three-way reconciliation (using real data, not canned) so you can get a sense of how long it will take.
Trust Accounting in Tabs3 Financials
Tabs3 Financials in Tabs3 Cloud automates each step of the trust reconciliation workflow.
- Bank import + transaction matching.
- Real-time trust and client ledgers.
- Automated three-way reconciliation.
- Exception alerts.
- Audit-ready reconciliation reports.
If reconciliation is your monthly bottleneck, Tabs3 automation could help you reclaim hours without compromising compliance. Schedule a demo today.
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