An Anticipated Payment is recorded in a Lawyers Bookkeeping system when they want to invoice the client for reimbursement of a disbursement but they haven’t yet received the bill form the supplier.
Lawyers often receive money in advance into their General Trust Account which can be used for either direct payment of costs relating to the matter (eg.Barristers Fees) or for payment of the Legal Firms Invoices relating to that matter which may include reimbursement for Professional Fees, Cost Recoveries, Disbursements or Anticipated Disbursements.
The Regulations governing Legal Trust Accounts require that the Law Firm must have actually “Paid” any 3rd Party Disbursements before they are allowed to reimburse themselves from the their Trust Account. The reason for this is that some Legal Firms have been found to write cheques for the disbursements then put them in a drawer for a couple of months, but still withdraw the clients funds to pay their own invoice from the Trust Account.
Accounting Treatment
Some Legal Bookkeeping systems allow you to monitor your Anticipated Disbursements accurately within the Matter however the accrued liability does not always flow through to the Law Firms Office Accounts with either Xero or MYOB through there Office Account Integration. Therefore if the Law Firm is reporting on an accrual or hybrid basis you may need to manually enter this adjustment at the end of the month to account for it in both your BAS and Management Accounts.
