Use QuickBooks Online Advanced’s enhanced custom fields to pay law firm attorneys per matter (and help your clients retain great talent)

Use QuickBooks Online Advanced’s enhanced custom fields to pay law firm attorneys per matter (and help your clients retain great talent)

At QuickBooks® Connect, I learned that enhanced custom fields in QuickBooks Online Advanced solved so many problems for law practices, especially law firms that have multiple attorneys who are trying to figure out compensation. This news was very exciting to me, since my firm, Legal Ease Bookkeeping, LLC, niches in providing bookkeeping services to attorneys.

Soon after, I started talking to a potential client and trying out the fields for the first time to make a report that would show compensation. Also, this particular attorney wanted to pay a rainmaker (the person who brought in the client), a supervisor, and timekeeper per each matter that was paid.  He wanted a monthly report to show how much commission to pay for the previous month.

By using Advanced’s enhanced custom fields, I was able to make a report showing who worked on each matter and what percentage each person should get paid. Then, I was able to take that report and do a couple of quick calculations to quickly figure out how much to pay people. This would have normally been a pretty complex compensation calculation, but custom fields made it so much easier by eliminating a lot of manual work.

I knew I couldn’t keep this a secret and had to share what I had discovered.

What are enhanced custom fields?

Enhanced custom fields are available for searching, sorting, and filtering in custom reports. These are more for internal purposes, but you can have three that you show to customers on invoices or sales receipts. Enhanced custom fields are only available with QuickBooks Online Advanced. Note: QuickBooks Online Plus does have one custom field, but it does not allow you to put that field on reports.

Currently, you can have up to 36 custom fields:

  • 12 customer fields
  • 12 purchase order fields
  • 12 sales fields

Setting up enhanced custom fields for your law client

To start using enhanced custom fields in QuickBooks Online Advanced, you will go to the gear icon and click on Custom Fields under lists:

QuickBooks Online Advanced Setup

Next, you will be asked “What do you want to track?” You have two options: Customer info and Transaction info. Customer info is information that is specific to a particular client and is the same for all sales transactions for that client. Transaction info is specific to each transaction so one client could have different pieces of info for each transaction.

QuickBooks Online Advanced custom fieldNext, select the type of custom field you want to make. You can make a text field, number field, date field, or drop-down list. The drop-down list can have 99 options and is great for things like names where you may need to run a report by name. I would try to choose the drop-down list as often as possible to limit the number of variations of the text.  If you use a text field instead to track the head attorney, enter that person’s name differently on different occasions. For example, she may be entered once time as Jane Doe, another as just Jane, and a third still as J. Doe. This can make it a pain if you want to run a report showing all sales for Jane. Using the drop-down box instead ensures Jane’s sales will have the same name variation on each transaction.

You are also given the option to include this field on sales forms. I strongly recommend this for running reports based on sales. You can also present customers your choice of three custom fields on invoices sent on behalf of the client – this is where you would select that. Don’t worry if you aren’t sure whether you want to show a particular field on invoices; you can always go back later and change it.

For my client, I made six custom fields. Three were drop-down fields: Rainmaker, Supervisor, and Timekeeper.  Three were number fields: Rainmaker Amt, Supervisor Amt, and Timekeeper Amt. When you are creating the drop-down type fields, you will be asked to fill-in options for the dropdown box. Again, there is no need to worry about getting this 100% right the first time. You can always change or add more options later.

QuickBooks Online Advanced

Next, I went to each customer and selected the names and entered the percentage each person was to get paid off of the sales.

QuickBooks Online Advanced

All of the fields will show up when you look at an invoice and will say whether the customer can see them. For this situation, I wasn’t showing any of these fields to the customer so when I looked at the invoice, they all say, “Not shown to customer.”

QuickBooks Online Advanced

How do you use Advanced’s enhanced custom fields on reports?

Once I had the information for each client filled in, I made a custom report to see the sales detail. I started with the Sales by Customer Detail report, and customized it to show the six custom fields.  You want to make sure you save your customizations so you will always have this report for the future.

QuickBooks Online Advanced

Note: Custom fields will not show up on every report. For instance, they won’t show up on summary reports such as Sales by Customer, but will show up on detail reports such as Sales by Customer Detail.

Once you have the report, you are almost all the way done figuring out compensation. You have also eliminated a ton of future work figuring out which matters belong to which people, but it doesn’t get you 100 percent there. You still need to put this into Excel or Google Sheets, and make the final calculations.

In order to get the compensation, you would need to take the percentage times the amount paid and add up all the pay for each person. For example, you could sort the spreadsheet by timekeeper column, and then take the timekeeper percentage times the amount to get the pay for each row in Excel. Once you have that number, you will take the sum for each person to get their timekeeper pay. Follow those same steps to get the supervisor pay or the rainmaker pay.

In my example, Adam would get paid $200 for his timekeeper pay, $75 for his supervisor pay, and $100 for his rainmaker pay for a total of $375.

QuickBooks Online Advanced

Now, if you are really great at automating, you could setup a macro in Excel to do the rest of your calculations. Whether you are an Excel guru, the Sales by Customer Detail Report with custom fields will make it so anyone can figure out how much each person should get paid.

For an in-depth look at enhanced custom fields, check out this guide: Custom fields in QuickBooks Online Advanced.

Advanced’s enhanced custom fields make you a hero

Not getting paid in a timely manner is something that can make attorneys leave one practice and join another. By using enhanced custom fields, you can be your law firm client’s hero and help them retain great employees. Helping with compensation is just one way you could use these fields to save yourself time. There are many more, and I hope you start using them and finding more ways to help your clients.