There are several client cost accounts that exist by default in your Chart of Accounts in CosmoLex. Use this article to learn about each type of account.
While this article may serve as a helpful reference, we highly recommend that you seek accounting advice from your accountant or bookkeeper, or from one of our Certified Consultants.
Descriptions and Effects on Accounting
- 1700: Advanced Client Costs – a balance sheet account. Expenses for contingency cases are booked to this account and reimbursement is done at settlement. Many firms use Advanced Client Costs for all matter expenses, even those that are contemporaneously billed and reimbursed. As cost is recovered, it gets allocated back to 1700: Advanced Client Costs.
- 6610: Reimbursable Client Costs – an expense account on the Profit and Loss statement. Typically, firms use this type of account for expenses that are being invoiced to the client contemporaneously, with the expectation that payments will remain current. As direct (hard) costs are recovered, they get allocated 4200: Reimbursed Client Costs (Direct) – an income account.
- 4250: Inhouse Reimbursed Client Costs (Indirect) – an income account. As indirect (soft) costs are recovered, they get allocated to this account.
- 6620: Non-Reimbursable Client Costs – an expense account that is used to enter matter costs that are considered “Un-billable” or “No Charge” and never to be recovered. (This option is available for use only when posting to a matter that falls under a billing method assigned to the 6610:Reimbursable Client Costs (Expense) Account – see above)
Changing Default Account for Client Costs
Example: I’m using Advanced Client Costs (Asset Account) and now want to use Reimbursable Client Costs (Expense Account), how do I do this?
First, change the default account on the firm level as shown above.
Making this change, however, will not change previously categorized matter costs. To do this, you will want to find previously recorded costs and edit them.
- For Unbilled Expense Cards
- Edit each expense card and select the new account. Only the new account will be available.
- Unpaid invoices
- Edit each expense card and select the new account. You can do this from within the “Edit Invoice” screen. Only the new account will be available.
- Paid Invoices
- Delete the recorded payment
- Edit the invoice, then edit affected expenses from this screen. Generate invoice again.
- Apply Payment back to the invoice