Only 48% of law firms respond to requests for accrual estimates—and this is a big problem.

Timely accruals are key in telling the story of your legal department. These estimates give your team and company a clearer picture of your legal spend, the projects being worked on, and the pace at which law firms are handling specific matters. And these figures get passed up the value chain—from your GC to your CFO, CEO, and shareholders—people you don’t want to keep waiting or give incorrect information to.

But without month-end accruals, your balance sheets and general ledgers won’t be accurate. In fact, public companies have had to restate earnings because of missed legal accruals. That’s definitely something you want to avoid!

Still, your vendors aren’t completely at fault here. They have their own financials to worry about and may not be familiar with an accrual-based process. Many firms are just used to billing for services rendered, recording each invoice as accounts receivable instead of accrued revenue. But when this happens, you may have already gone past your deadline to record it as an accrued expense or accrued liability in your monthly record.

Like any type of behavior change, it can initially be difficult to convince law firms—many of whom see accrual submissions as extra work—to start routinely providing timely accrual estimates. Fortunately, we’ve cracked the code on how to do so while minimizing stress for both parties.

Tips for working with your law firms

Your law firms aren’t just vendors. They’re strategic business partners that are an extension of your legal team. As such, your goal shouldn’t be to collect an accrual number from them at the end of the month, quarter, or year but to foster a long-term relationship that’s focused on achieving your departmental and company-wide goals.