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Clio IOLTA Daily or Weekly Review

Keeping Clio trust account balances updated and correct throughout the month.
Clio IOLTA Daily or Weekly Review
Written by
Paul W Carlson, CPA
Published on
Dec 8, 2023

Join us in reviewing best practices in maintaining trust account accuracy within Clio.

Paul W. Carlson, CPA:

Hi, this is Paul Carlson, CPA with Law Firm Velocity. We're going to walk through our suggestions on how to help the office manager keep the Clio balances correct throughout the month, that when we do our monthly IOLTA reconciliations, that we will go through and tie Clio back to the accounting system and what we see in the bank records. And sometimes firms want a little more help with getting their office manager’s help to keep Clio clean. So here's our suggested process. So first we want to give the office manager a Clio login, which they have already for their posting transactions. Next, we need to give the office manager IOLTA Trust account bank activity reports. So either reports daily or weekly, that include all transactions that have posted to the IOLTA account that month, that either the managing partner can print the reports all the time, which is probably not a great idea.


Better idea is to give the office manager read-only access to the trust account from the online banking system. That way the office manager can go in and pull the detail reports whenever they need to. And then they will also need a read-only access to LawPay or other merchant account so they can go in and run reports. So now that we have the bank account activity report, we want to go into Clio and open the trust account. So Clio, "Accounts", click in the IOLTA account. Then from that bank activity report, we want to make sure that all the transactions that are listed on the bank report are listed here in Clio. And on the other direction, all the items within Clio should be showing up as clearing on the bank statement, sometimes a paper check will take a couple days to clear, but the two systems should really be in lockstep with each other. And from that, the idea here is to help the office manager find transactions that they maybe forgot to post or that maybe they weren't told even existed. And that way they're updating Clio based on what they see at the bank. A more advanced tool is Clio reports.


Clio reports IOLTA balance in real time. So if everything has cleared to the bank, that the bank account balance should tie to the balance listed within Clio. We'll jump into outstanding items here in a bit, but that's the second confirmation. We confirm all the detailed transactions are in, and we confirm that the running balance ties to the bank statement. All right. And then the other confirmation, we want to make sure that all clients have current trust account balances. So go reports, "Trust Listing summary", uncheck "Show zero", otherwise the report's monstrous, and "Generate Report."


And scroll through these results and research any one that has a negative balance or if their balance just doesn't look correct. So let's walk through a couple complications. So one big complication we have within Clio is Clio doesn't have a concept of aggregate deposits. So here's what we see within merchant account statements, or even aggregate bank account deposits, that we'll get paid from Client A for $2,000. We'll get paid from client B for $3,000, and the bank statement will show that a total of $5,000 was deposited, we have this mismatch because Clio shows the per matter activity and has no way to show the total $5,000 that tie to the bank statement. So the office manager is going to need to rely on the LawPay reports, and then just other deposit history to be able to tie the detailed transactions from Clio back into the aggregate amount they see on the bank deposit.


If you want, what we'll sometimes do is we will go in, that once a 5,000 aggregate, we will go into the individual transactions and we'll add a note in the payment saying that this $2,000 payment was part of the $5,000 April 10th merchant account deposit. That way, at least we're trying to do some connection between the transactions within Clio and the bank statement. The second complication is timing. Clio transactions should be dated as of the credit card swipe date or the date the firm receives checks from clients. So credit card swipes, you swipe on the 10th, and typically the funds will be deposited to the bank account on the 12th or the 13th, within Clio we need the swipe date or the 10th should be recorded as a transaction date. So there's always going to be a two or three day lag between the Clio transaction date and the date the funds actually hit the bank account.


For checks received from clients, most states require that if your firm receives a trust account check from a client, that that has to be deposited to IOLTA by end of business that day, or at least the following day. So there should not be a significant delay between the Clio deposit date and the date we actually see that at the bank. And then a more advanced topic, probably don't worry about this at very beginning. And what we'll run into is the bank account balance. We'll say that the IOLTA account has $25,000 in it. Clio will say the firm has 20,000 in IOLTA. And what we're looking at is that there's outstanding checks that have not cleared the bank. Clio knows all the checks that have been written, but the bank doesn't. And so we need to adjust the bank balance to reflect anything that's not cleared, if you want to tie the current bank balance to Clio. And with that, that's a quick overview of our suggestions on maintaining Clio trust account accuracy. Thanks and bye.