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Accruals and unbilled amounts

Sending Accruals to Your Finance Department

The primary tool for generating monthly accrual information is the Accrual Report & Detail Exports. The most efficient process is to have your finance department sign in to Tracker and download the data directly from that report.
However, if your finance department would like the law department to send a spreadsheet of accrual data, you can export the data using the Accrual Report and email the data to the applicable individuals in your finance department. Note that there are two possible formats of data in the Accruals export: either one accrual per row, or, if there is more than one allocation in the matter accounting codes, each accrual is split into multiple rows.
Which field is the accrual that my finance department should use?
Confer with your finance department to make sure that they use the proper field of data from the Accrual export. Most finance departments will use the "Accrual Period Ending Balance." This amount is the exact amount of accrued obligations that have not been sent to your finance department as of the accrual lockdown event.
note
Accrual is not a net adjustment to the prior accrual. In Tracker, each accrual is the total current amount of outstanding expenses that have not been sent to AP for payment. Some law departments may have previously sent a net adjustment to the prior accrual to the finance department. The accrual in Tracker, however, is not a net adjustment; instead, it assumes that the accrual for the prior month has been "zeroed out."
Do not use the Unbilled Amounts report to send accrual data to your finance department. The Unbilled Amounts report is primarily for law firms to be able to see historic amounts of unbilled time. Do NOT use this as the report to send to your finance department. If you do, your accrual numbers will be inaccurate because they will not include any pending invoices that have not been sent to AP.
When to Send: AFTER the accrual period lockdown event
It is very important that you do not send accrual data before the accrual period lockdown event. If you send it before that date, the accrual data will not be accurate. To determine when your lockdown event will occur, view the Accruals Schedule. If your company's system is set up so that there is a company review period, the lockdown event will be at approximately 11:59 PM Pacific Time on the Co.Input Cutoff Date (after the period of time when company users can review the current month's estimate). If there is no company review period, the lockdown event will be at approximately 11:59 PM Pacific Time on the LF Input Due Date.
note
If you send the Accruals export to your finance department before the end of the month, and then send a new AP Extract to your AP Department before the end of the month, the Accrual Period Ending Balance will no longer be accurate. See the next section for more information.)
If you use the Accrual Report as the source of data for your accruals (as recommended above), you can be assured that you will not send accrual data before the lockdown event because the Accrual Report cannot be run before the lockdown event.

For law departments that prepare accruals before the end of the month

This section applies only to law departments that are set up so that the accrual period lockdown event is before the end of the month.
If you send a new AP Extract to your AP department after the accrual period lockdown event but before the end of the month, the Accrual Period Ending Balance may no longer be accurate and should not be used by your finance department as the accrual for the month.
The accrual period lockdown event is December 20, and when that date passes the Accrual Period Ending Balance for the Shriber & Handy firm in Matter XYZ is $100,000. That number is composed of (i) a pending invoice that has not been sent to AP for $75,000 and (ii) $25,000 of unbilled time as posted by Shriber & Handy. On December 21, the law department exports the accrual data and sends the information to their finance department (i.e., follows proper procedures). However, on December 22, a company user approves the $75,000 invoice, and a new AP Extract is generated and sent to AP that includes the $75,000 invoice. From the finance department's perspective, that $75,000 is on the books in December; however, if they use the Accrual Period Ending Balance of $100,000 in the spreadsheet they received on December 21, they will have double-counted the $75,000 invoice. As discussed below, in this case the law department should generate a new accrual export, and the finance department should use the Remaining Accrual Balance amount from the export (which in this case will be only $25,000).
Guard against sending a new AP Extract after the accrual period lockdown event and before the end of the month
Each law department will need to be responsible for instituting a policy to not run a new AP Extract during this critical window before the end of the month. In addition, Tracker provides a warning if a user tries to generate a new AP Extract during this critical window.
Tracker does not prevent AP Extracts from being generated during this time because there may be an invoice that requires urgent payment, and disabling the AP Extract feature for any period of time can create significant problems (especially because some law departments might try to send the invoice to AP outside of the system, which would then create a risk of double payment).
What should we do if we have sent a new AP Extract after the accrual period lockdown event but before the end of the month?
As shown in the example above, if an AP Extract is accidentally sent to AP after the accrual period lockdown event but before the end of the month, the Accrual Period Ending Balance may no longer be accurate. Moreover, you cannot cause the system to recalculate the Accrual Period Ending Balance (the Accrual Period Ending Balance is treated similarly to an approved invoice: for audit and SOX reasons the data is locked down and cannot be recomputed). Accordingly,your law department should follow this process:
  1. Re-export the accrual data using the Accrual Report & Detail Export and send the new spreadsheet of accrual data to your finance department.
  2. Instruct your finance department to use the Remaining Accrual Balance amount for their accrual rather than the Accrual Period Ending Balance. (The remaining amount will have subtracted the invoices that were sent to AP after the accrual period lockdown event.)

This article applies to:

  • PRODUCT: Legal Tracker
  • Audiences: Company