Clio knows what each client is owed. Your ledger has to agree with it, every month.
Most firms we meet already run Clio well. Matters, time, billing and client trust ledgers are in reasonable order. What tends to slip is the firm’s own accounting and the monthly step that ties the two together, which is also the first thing anyone reviewing your trust account will ask to see. This page is about that step: what it should produce, what it catches, and where the routine transactions go wrong.
A firm holding client funds keeps two things at once: its own books, which work like any professional services business, and a record of money that belongs to other people. The second one has rules the first does not, and most of the work follows from them.
Your state bar is the authority and the detail varies, but the shape is consistent nearly everywhere and follows the model rule on safekeeping property.
Client funds sit in their own account. Separate from operating, with no firm money parked there for convenience. Practically, that means the trust account gets its own bank arrangement, and it is worth asking the bank in writing not to take fees or overdraft charges from it.
Every client and matter has a running ledger. Receipts, disbursements and balance, not a periodic summary. This is what makes it possible to answer the only question that really matters: what is this specific client owed today.
No client balance goes below zero. Which is a stronger rule than it first sounds, because it means one client’s funds can never cover another’s disbursement, even overnight, even when the incoming deposit is certain.
Fees move once earned, against an invoice. Both directions matter. Drawing before the work is billed uses money that is not yours yet; leaving earned fees sitting in trust is its own problem in many states.
What good looks like in the ledger: a trust bank account and a trust liability account that are always equal and opposite, never used for anything else, and never netted against operating. If your chart of accounts has one and not the other, that is the first thing to fix, and it takes an afternoon.
Screenshot: the pair, shown with demo data. Under assets, a trust account typed as a bank account so it reconciles against a real statement. Under liabilities, the trust liability, carrying the same figure. That is what correct looks like: one number in two places, the cash the firm is holding and the obligation to give it back. If those two do not agree in your file, the reconciliation has nothing to stand on, and a firm with the bank account but no liability account has nowhere to record what it owes clients at all. This is Xero software, not a Logiframe product, and the figures are illustrative. Xero is a trademark of Xero Limited.
The control
The Three-Way Reconciliation, Step by Step
This is the procedure at the centre of trust work. It is not difficult, it takes under an hour in a well kept file, and it is the single most useful hour a firm spends each month.
Three figures have to agree as at the same date:
One
The trust bank
The adjusted bank balance. Reconciled properly, with outstanding checks and deposits listed individually rather than assumed.
Two
The trust liability
The control account in your general ledger, representing everything owed back to clients in total.
Three
The client ledgers
The sum of every individual client and matter balance, printed as a list, with the list itself retained.
The order is what makes it quick. Reconcile the bank first, so you are comparing against a number that is already right. Post the period’s trust journals into the ledger next, so the liability account is current. Then run the client ledger report and compare all three. If they agree, you are finished. If they do not, the difference is almost always in step two, because the bank and the practice management system are both recording actual events while the journal is the step a person performs.
Two habits make the difference between a firm that finds this easy and one that dreads it. Scan the client ledger list for any negative balance before you look at the total, because that is the finding a reviewer looks for first and the total will not reveal it. And keep the output: the three figures, the list, the date and who performed it. A reconciliation you cannot produce a year later did not fully happen.
A useful monthly test: a trust account can agree to the bank and to the ledger in total while one client sits overdrawn, covered by another client’s funds. Only the itemised list shows that. If your current process produces a total and not a list, adding the list is the highest value change available to you.
The systems
Where Clio Ends and the Ledger Begins
Most firms we work with run Clio, and it is genuinely good at what it does. Understanding the boundary matters, because the gap between the two systems is where trust errors live.
Clio holds the matter. Time, billing, disbursements, client and matter trust ledgers, and the trust reports your state bar expects to see. That is the source of truth for what each client is owed.
The general ledger holds the firm. Profit and loss, balance sheet, payroll, partner draws, and the trust bank and trust liability accounts that have to reconcile back to Clio.
The integration syncs contacts, time and expense activities, bills, credit notes, interest and Clio Payments transactions. What it does not do is move trust activity into your accounting file on its own. Trust receipts and disbursements are recorded against the trust bank and trust liability accounts by journal, and Clio’s own trust ledger report is what you reconcile against. Clio documents this itself.
The Clio Manage with Xero arrangement, which is what most firms are running. Clio is authoritative for what each client is owed, Xero is authoritative for the firm. The solid line syncs on its own; the dashed line does not, and that is the step someone has to perform each period. The three boxes at the bottom are what the month proves, and the third has to be an itemised list rather than a total. On Clio Accounting the two right-hand boxes move inside Clio and the dashed line disappears, with payroll being the notable thing that still lives elsewhere.
This is the seam, and it is where firms come unstuck
Two systems, one of which is authoritative for client balances and the other for the firm’s financial position, joined by a step that somebody has to perform every month. When a firm tells us its trust does not reconcile, the cause is almost never Clio and almost never the accounting file. It is that the journal between them was skipped, estimated, or posted to the wrong period.
Clio Accounting changes the question, but not for everyone
Clio launched a built-in general ledger inside Clio Manage in February 2026. For a solo practitioner who wants one system and one subscription, that is a reasonable answer and it removes the seam described above entirely. For firms with payroll running elsewhere, a CPA who works in a particular platform, multiple entities, or reporting needs beyond the basics, the established arrangement of Clio alongside a full accounting platform still holds.
Our honest position: it is a real option and worth evaluating, and it is also a product in its first year. If you are already running Clio with Xero or QuickBooks Online and the reconciliation is working, changing the architecture is not urgent. If you are choosing now, it deserves a look.
The common causes
The Routine Transactions That Create Shortfalls
Almost every trust problem we see started as an ordinary transaction that landed in the wrong place. Each of these has a straightforward fix, and most of them are one-time setup rather than ongoing effort.
Bank fees taken from the trust account. The bank does not know which account is which, and a fee charged there means client money has paid a firm expense. Fix: arrange with the bank that all charges go to operating, and check the trust statement each month for any that slipped through.
Card processing fees netted out of trust deposits. A general purpose processor that deducts its fee before depositing creates a small shortfall on every transaction. Fix: use a processor that deposits the client payment gross to trust and takes its fee from operating separately. This is a question to ask before signing.
Disbursing against funds that have not cleared. The deposit shows, the payment goes out, the deposit is returned. Fix: a written holding period before disbursing against a deposit, applied consistently rather than case by case.
Fees drawn at the wrong time. Early uses unearned money, late leaves earned fees in trust. Fix: tie every transfer to an issued invoice and make the transfer part of the billing run rather than a separate task someone remembers.
Advanced client costs booked as expenses. Money the firm fronts is a receivable, not a cost. Fix: a balance sheet account for advanced costs, with recovery posted against it. This one is an accounting error rather than an ethics one, but it quietly distorts every profitability number the firm looks at.
Small residual balances left sitting. Amounts of a few dollars belong to someone, and every state has a process for resolving them. Fix: review balances that have been static for a year as part of the annual routine, rather than discovering a decade of them at once.
Past compliance
What the Numbers Can Tell You Beyond Compliance
Trust compliance keeps you safe. It does not tell you which work is worth doing, and the same systems already hold what would. A firm that is fully compliant can still have no idea which of its work is worth doing.
Realisation. The gap between time recorded, time billed and cash collected. Three different numbers that firms routinely discuss as though they were one.
Matter and practice area economics. Which work earns, once the time actually spent on it is counted rather than the time budgeted.
Write-offs, visible rather than absorbed. Discounts given at billing are a pricing decision. Recorded properly, they are a number partners can discuss.
Advanced costs as an asset. For contingency practices in particular, money fronted for cases is one of the largest items on the balance sheet and is frequently the least well tracked.
Clio holds most of the raw material for this. The work is getting it into a shape a partner can read on a monthly basis, alongside financial statements that agree with it.
Boundaries
What We Do, and What We Do Not
Sharper than usual here, because in this area the boundary protects you as much as us.
We do
Maintain the firm’s books and the trust bank and liability accounts alongside Clio
Perform the monthly three-way reconciliation and produce the schedule of client balances
Report exceptions to you in writing, including any overdrawn client ledger, the same month
Keep the reconciliation documentation in a form your bar or your auditor can review
Produce firm reporting: realisation, matter economics, advanced costs, partner distributions
We do not
Advise on your state bar’s rules or give any ethics or legal opinion
Certify or attest that your firm is compliant. The records support your compliance; the responsibility is the firm’s
Hold signing authority or move money, in trust or in operating
Prepare or file tax returns, or run payroll outside QuickBooks Workforce and Gusto
Audit. If your bar or your bank requires one, that is a separate engagement with someone else
Questions
Questions Firms Ask
Do we still need Xero or QuickBooks now that Clio has accounting?
It depends on the firm. A solo practitioner wanting one system and one bill has a genuine option now that did not exist before February 2026. A firm running payroll elsewhere, holding more than one entity, or needing reporting beyond the basics is generally still better served by Clio alongside a full accounting platform. If your current setup reconciles cleanly every month, there is no urgency in changing it.
Our trust account balances, so we are fine, aren’t we?
Not necessarily. A trust account can agree to the bank and to the ledger in total while an individual client balance sits overdrawn underneath it, offset by another client’s funds. That is the condition the three-way reconciliation exists to find, and it is only visible when the individual client balances are listed rather than totalled.
Who carries the responsibility for trust?
The attorney does, always. That does not change by hiring anyone, including us. What we can do is make sure the reconciliation is performed every month, that exceptions reach you in writing rather than sitting in a file, and that the documentation exists if anyone asks to see it.
Can you take over trust bookkeeping from our current bookkeeper?
Yes, and the first step is establishing where things actually stand. That means a reconciliation as at the handover date and a full schedule of client balances, before we take responsibility for anything going forward. If there is a shortfall, you need to know before we start rather than discover it in month three.
Do you work with practice management systems other than Clio?
Yes. The principles are the same in any of them: the practice management system is authoritative for client and matter balances, the accounting file is authoritative for the firm, and somebody has to reconcile the two every month. Clio is simply the one we see most often.
Do we have to change accounting software?
No. We work in both Xero and QuickBooks Online, as a Xero Gold Partner and an Elite-tier QuickBooks ProAdvisor firm, and both integrate with Clio. At this level the more useful question is whether the trust journals and the monthly reconciliation are being done properly, and that answer is the same on either platform.
When did you last see a full schedule of client balances?
Not the trust total. The list, client by client, agreed to the bank and to the ledger on the same date. Tell us what you run and we will tell you what your reconciliation is actually proving.
