Separating Disbursements From Expenses on an Invoice

When setting up your invoice templates, you can separate your office disbursements from your office expenses on an invoice. This is especially useful for New Zealand users who must meet New Zealand Law Society regulations.

To explain further, the New Zealand Law Society promotes open and transparent billing and does not condone describing an office service fee or expense recovery (which is not an actual cost to the practice) as a disbursement. Any actual disbursement, such as an identifiable courier charge, should be listed as a disbursement. 

This means that any administrative charges or additional fees (e.g., administration fees for running a property search vs. the cost of the search itself, or administrative fees (e.g., 3%) charged on a file) are not classed as disbursements and cannot be invoiced as such.

In Actionstep Practice Management, you have two choices: you can include these administrative fees as time and have them appear as a line item in your time entries at a fixed fee, or you can still add them to Practice Management as disbursements so that they are not coded in the general ledger to disbursements and they do not appear as disbursements on the invoice.

To do this: 

1. In Practice Management, create a separate "income" general ledger account to which these "expenses" will be allocated. (See Adding a General Ledger Account for help.)
   
   For this example, a general ledger account was created called Office Expenses (account number 4-1300) in the Income section.
   
2. Make a note of the GL account number that you are allocating these expenses to. This is because you will need to remove these from your disbursements on the invoice and make sure they are under a new heading called Office Expenses.
3. Review this sample invoice (download a copy of the template):
   
4. Note the following details: 
   • Under the Office Expenses heading, review this conditional merge field:
     *IF {SPI_Account|rn=*|ifnull=ignore} == "4-1300"
     
     This means that under the heading Office Expenses, we want to show only line items that have been coded to the general ledger account 4-1300.
     
     The following example is a disbursement for an administration charge:
     In this example, there is a 3% admin charge on a fixed fee of $1,000 matter. As you can see, the administration charge has been added as a disbursement but is being allocated to the 4-1300 Office Expense general ledger. This means it will appear under the Office Expenses heading in your invoice template (not the Disbursements heading) and now meets the New Zealand Law Society Regulations.
     
     
   • Under the Disbursements heading, all line items under 4-1300 (as these are shown under the Office Expenses heading) will be deleted as well as anything else under the fees heading 4-1100 (as these are shown under fees). You only want the disbursements that have been coded to 4-1200 to show.
     
     The invoice template (below) will work if your general ledger is set up like the following. If it is not, you need to change the invoice template to the correct general ledger account codes so that it will work correctly.           

Related Articles:

• Creating a Disbursement from a Firm Withdrawal
• Understanding Disbursements