Trust Bank Fees and Errors in Legal Bookkeeping

By: Keith Hill Jr.

On occasion, law firms may encounter various bank fees and errors that can affect your Trust account and General/Operating account. In this article, we will explore some common types of bank fees and errors in Trust that law firms may face and provide tips for handling them.

Service Charges and Fees

Banks and other financial institutions often impose service charges and fees for various services such as e-transfers, cheque certification or "non-sufficient funds" (NSF) cheques. These charges can come as a surprise, especially if you were unaware of them at the time of account opening or transaction.

If you have a mixed trust account, it is essential to ensure that the agreement you sign directs the institution to deduct any service charges for your trust account from your general operating account and not from your trust account.

If you find any service charges or fees that you believe are incorrect, immediately contact your financial institution to address the issue. By staying on top of these charges, you can prevent any surprise deductions from your account and ensure that your trust account remains accurate and up-to-date.

Bank Processing Errors

Bank processing errors can occur when your financial institution records a transaction differently from what is reflected in your source documents and financial records. These errors can be frustrating and confusing, especially if they result in the wrong amount being credited or debited from your trust account.

If you notice any bank processing errors, immediately contact your financial institution to address the issue. It is also advisable to keep copies of all your source documents and financial records to assist in resolving any discrepancies.

Trust Reconciliation Deadline

As you should know, the deadline for completing your trust reconciliation each month is the 25th of the following month. This date was strategically set forth by the Law Society to give you enough time to complete your reconciliation (3 weeks and a few days) and the remaining days of the month should be used to correct any errors before the month's end so that they ideally do not get carried over to the following month. This usually means that a deposit into the Trust needs to be made to settle any overages from bank charges, for example.

Legal Bookkeeper

A good way to avoid these problems is by hiring a good legal bookkeeper. A legal bookkeeper is a professional who specializes in managing the financial records of law firms. They can help you keep track of all your transactions and maintain accurate records.

Conclusion

Handling bank fees and errors is a critical aspect of trust accounting for lawyers. By understanding the terms and conditions of your account, keeping detailed records, and promptly addressing any issues, you can ensure that your trust account remains accurate and up-to-date.

###

Keith Hill Jr. is the Principal of Bookkeeping Matters Inc. (BMI), a leading provider of legal bookkeeping services for over a decade. Serving lawyers across Ontario and beyond, BMI has established a reputation for excellence in legal accounting. Drawing on his experience as a former Legal Accounting professor, Keith has also positioned BMI as a premier source of online legal accounting education. Specializing in various practice management software, BMI is dedicated to helping law firms optimize their financial operations.

Contact BMI at info@bookkeepingmatters.ca, 1-800-893-2820, or visit www.BookkeepingMatters.ca.

©2024 Bookkeeping Matters Inc. All rights reserved. Reproduction with credit is permitted.