Trust Money Is Never the Firm's Money
Money held in trust belongs to the client until it's properly earned and transferred to the firm via a valid invoice for work actually performed. This isn't a bookkeeping preference, it's a strict regulatory requirement under Victorian legal profession rules, designed to protect clients.
Why It's Kept Entirely Separate
Trust accounts sit completely apart from the firm's operating account and don't appear in the firm's revenue. This separation exists so that client funds can never be mistaken for, or mixed up with, the firm's own cash.
Monthly Reconciliation Is Non-Negotiable
Victorian requirements typically call for monthly reconciliation, the trust ledger, individual client ledgers, and the bank statement all need to match, every month, without exception.
Who Can Manage This Day to Day
A bookkeeper experienced with legal trust accounting can manage the routine reconciliation and record-keeping, but ultimate compliance responsibility always sits with the principal of the firm.
Where Things Commonly Go Wrong
The most common issues we see are timing gaps between invoice issue and trust transfer, ledger entries that don't match bank records exactly, and inconsistent processes when multiple staff handle trust transactions.
True Tally, bookkeeping for Mornington Peninsula law firms
We support Mornington Peninsula law firms with accurate, compliant trust account reconciliation every month. Book a free call to review your current process.
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