Bank reconciliation software for law firms has to do something ordinary bookkeeping software does not: compare three figures rather than two, and refuse to call the job done until they agree exactly.
This is a practical guide to the three-way reconciliation, what it is for, and what to demand from any package that says it produces one. It is market commentary and a compliance overview, not legal advice.
Why three figures and not two
Ordinary bank reconciliation compares what the bank says against what your books say. A firm holding client money has a third number, and it is the one that matters most: the total of the individual client ledgers.
The bank balance tells you what is in the account. The cash book tells you what you think you did. The sum of the client ledgers tells you what you owe, client by client. All three must agree. Two out of three is how a shortfall hides: the account can balance perfectly against the cash book while the ledgers underneath add up to a different number, which means somebody's money is missing or somebody has been credited twice.
The reconciliation must be done at least every five weeks for every client account, differences must be promptly investigated and resolved, and the statement must be signed by the COFA or a firm manager. Five weeks is the ceiling, not the target. Most firms reconcile monthly.
What "resolved" has to mean
The phrase that does the work is "promptly investigated and resolved". A difference that appears on one reconciliation and reappears on the next four, described each time as a known difference, has not been resolved. It has been carried.
This is where software either helps or quietly hurts. A package that lets you complete a reconciliation with an outstanding variance is a package that lets a firm build a habit of carrying differences, and a habit is what an inspection finds.
Writford refuses completion unless both variances are exactly zero. Not within tolerance, not flagged and allowed through: refused, with the reason. The completion and any reopening both run inside a single database transaction, so the status change and the underlying flags move together or not at all.
Locking, and why one at a time matters
Two people reconciling the same account at once is a reliable way to produce a signed statement that nobody can reproduce. Writford holds an exclusive lock: one reconciliation in progress per account, and only the holder can change it.
Nothing in the reconciliation moves money by itself. Ticking an item as presented records that it appeared on the statement. The only step that posts anything is an addition, and that goes through the same posting engine as every other entry, with the same validation, rather than through a side door that exists only inside the reconciliation screen.
What a signed period should do afterwards
Signing is not the end of the control, it is the start of it. Once a period is closed and signed off it locks, and reopening requires a written reason. Every posting keeps who made it and when, and the audit trail is retained for six years.
That combination is what makes a reconciliation worth anything a year later. A signed statement that anyone can silently edit afterwards proves only that somebody clicked a button.
A checklist to run against your current package
Take these to a demonstration rather than a brochure.
Does the report show three figures or two? Ask to see the client ledger total as its own line, not as an implied balance.
What happens when you try to complete with a variance of one penny? If it completes, ask what stops a firm doing that every month.
Can two people open the same reconciliation? Can a signed period be edited without a trace? How far back does the history go, and can you retrieve a specific past statement rather than a summary?
Can you evidence an empty exception list? An overdrawn client ledger report that returns nothing is only meaningful if the system also prevents the overdraw. Detection after the fact and prevention at the posting are different controls, and only one of them keeps the firm out of trouble.
Where the differences actually come from
Most reconciliation pain does not start in the reconciliation. It starts weeks earlier, in time recorded late, bills raised days after the work, and disbursements sitting on a spreadsheet nobody has looked at. By the time that data reaches the person doing the reconciliation it is already wrong, and the work becomes archaeology.
That is the argument for keeping the client account and the matters on one set of records rather than two systems kept in step by hand. Our guide to SRA accounts rules software covers the wider compliance picture, including the registers and reports an inspection asks for.
Fixing the capture layer is the cheapest reconciliation improvement most firms can make, and it is the one nobody sells as a reconciliation feature.