would you like to Bill your clients in a more unified way
so that everybody understands what they're being billed for
well then you need to use expense codes from the American Bar Association [Music]
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the American Bar Association has attempted to standardize the names of billable items
this would be helpful when billing clients outside parties that look at the invoices with build items
will have some sense of what these items are regardless of how each Law Firm would describe
them so where is the ABA expense item list well if you go to americanbar.org and then you go to
the section of groups litigation resources what you'll notice is there's a section for
uniform task-based management system that's the American Bar Association trying to streamline
these billable expenses so that everybody knows what they are regardless of how each Law Firm
would choose to describe them and if you follow through you get to the page of expense codes if
you open that page you would get this list now you can see these codes are categories
unto themselves but the code and the name of the item these are the things that actually should be
items on your expense items list so let let's actually pick two of them court fees and trial
transcripts let's put both of these items on our expense items list and we will connect them to
an account called court fees expense and it is also recommended that when you name the items at
the moment you put them on the items list that you include the number that goes with the name
that came from the American Bar Association so let's open the items list and in this example
let's make them one-sided items just to keep things simple so from the main menu we click
list items list then in the bottom left we click item new now they are both services
and again we will not click this check mark in the bottom left if you want to use this as
a two-sided item you can double check the video that came before this one but we will call this
court fees and court fees as an item is connected to the court fees expense account
then when we click next it's very convenient that it leaves
the expense account here when we put up the item for transcripts
and then when we click OK our items list is set up and we're ready to make our first transaction
regarding these items so for example let's imagine on August 29th we paid the county court to file a
petition and get copies of a transcript from a different case and let's imagine the transcript
fee was two hundred dollars and it's billable to Candy the filing fee was three hundred dollars and
it was billable to Betty and we paid them both with one check to the county clerk's office for
five hundred dollars so if that were the case what would happen in the trial balance at the
moment we record this transaction well the court fees expense account would hold both
of them and it would show up for the first time in the trial balance as five hundred dollars however
since the money is coming from the cash and bank account the cash and bank account would
decrease by 500 and become eleven thousand nine so let's go ahead and record this transaction
we click check and we make sure the date is August 29th of 2017 in our little story
and the uh people whom we're paying it's the county clerk so if you don't have county clerk
on your list you can put County Clerk now you do not put a money amount here and you
do not put an account down here remember we're working with items so you click the
items Tab and you click the pull down now the first one was the uh uh title search no
excuse the first one was the court fees and the court fees were three hundred dollars
and they were bill to Betty
that means that the transcripts were two hundred dollars
and they're billable to candy
so now we have our check and we have to make a check number 61 remove the check mark this
is just a little side note something you can look at later in the tools when you watch the
tools videos but this is our check that we are purchasing these two things that the American
Bar Association has given item numbers too that apply to these separate clients respectively
when we click save and close and you can see the results are exactly as what we expected
court fees expense became five hundred dollars and cash and bank account went down to eleven
thousand nine and now we'll check the profit and loss by client if you check the profit and
loss by client you can see that the uh court fees expense for 300 was tracked to Betty and that was
the filing fee and then the transcript that were for candy were only in Candy's column for 200.
and now we'll bill only Betty just for the filing fees so on August 31 we Bill Betty for the filing
fees from August 29th now what happens at the moment that we build Betty for that specific
part of the expense that we wrote to the county clerk well the court fees for Betty were only
three hundred dollars So at the moment we Bill Betty court fees expense will decrease by 300
and become two hundred dollars and because Betty is now responsible for that 300 the amount she
owes increases and since this is the account that really should say legal fees receivable because
it's owed to us will increase by owe to us 300 more and become 987 dollars at the moment that
we we Bill Betty for these three hundred dollars worth of uh filing fees so we click invoice and
we make it Betty and this is the proper yeah we have to click ok but this time we're choosing item
instead of expense click the check mark click OK and everything looks right except this has to be
August 31st and that's it with billing Betty and at the moment we click save and close we forgot to
remove the check mark for email latest who's save and close And now when we open the trial balance
the results are exactly as what we expected court fees expense has decreased by the three hundred
dollars and became 200 and unearned legal fees became 987 and we can double click take a look and
you can see it went up by the uh 500 but then it went down by only the 300 for the court fees that
or the filing fees let's say that we just billed to Betty and when we check the profit and loss by
client because I think the next one says check profit and loss by client you can see that the
three hundred dollars in court fees under Betty is no longer there it is no longer our expense
that lowers our profit with Betty because she is now responsible for it on one of her invoices
and finally Will Bill candy for the transcripts let's imagine on the same day we built candy for
the transcripts that we paid for on August 29th as part of the original uh check that
we gave to the county clerk so what will happen in the trial balance at the moment we Bill candy
well they were two hundred dollars so court fees expense goes down to zero because now
it's billed to a client and that two hundred dollars increases what that client owes so in
the receivables account that should read uh legal fees receivable it now becomes 1187 at the moment
we make this final invoice so we click invoice and it remembers the date and we build candy
notice when we click OK there's only one item even though two were on the check
we click OK and that item for the same amount that we purchased it is now on this invoice
and when we click save and close and then remove the running joke during the whole
course and then click save and close we can open the trial balance and we see court fees expense
is now zero because it has all been billed to clients and that's why unearned legal fees is
now at least close to the amount we expected and finally we will check our profit and loss
by client and when we come here and we check it we see that the two hundred dollars that
was previously here under candy which previously lowered our income regarding candy is now gone
and it has been a build to candy and it no longer lowers our profit with candy foreign
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