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Advanced Client Costs: How to Track and Recover Every Dollar

Updated: Oct 25


For many law firms, advanced client costs are a silent profit killer. Filing fees, expert witnesses, and other case expenses pile up quickly — and if they aren’t tracked properly, firms risk losing thousands of dollars each year.


Here’s how to set up systems that ensure every dollar advanced on behalf of clients gets recovered.


What Are Advanced Client Costs?


Advanced client costs are expenses a firm pays on behalf of a client with the expectation of reimbursement. Examples include:


  • Court filing fees


  • Expert witness retainers


  • Medical record requests


If these are coded as firm expenses, two problems occur:


  1. The firm loses the ability to recover the expense.

  2. The firm’s financial reports become distorted.


Step 1: Create a Clear Policy


Start by defining which expenses are advanced and how they should be recorded. A written policy ensures attorneys and staff code transactions consistently.


Step 2: Use the Correct Accounting Treatment


In QuickBooks Online with LeanLaw or Clio:


  • Record advanced client costs as an asset, not an expense.


  • Track costs by client/matter so they appear on client ledgers.


  • Reduce the asset when reimbursement is received.


Step 3: Train and Monitor Staff


Even with a great system, mistakes happen if staff aren’t trained. Provide short, practical training on proper coding. Then review client cost ledgers monthly to ensure accuracy.


Step 4: Bill Promptly


Delays in billing client costs reduce the chance of recovery. Best practice: include reimbursable costs on client invoices as soon as they’re incurred.


Case Example: One mid-sized firm we worked with was losing track of over $25,000 annually in advanced costs. By implementing an asset-based workflow and billing costs monthly, they recovered nearly all of those funds within a year.


Tracking advanced client costs isn’t optional — it’s essential for protecting profitability. With the right systems in place, your firm recovers what it’s owed, improves reporting accuracy, and builds financial confidence.


👉 Ready to fix client cost tracking? Medley Business Advisors builds workflows that ensure every dollar is accounted for.


Craig Medley, QBO ProAdvisor

Founder, Medley Business Advisors, LLC

Bookkeeping & Advisory for Law Firms


 📞 Phone: 443-822-2284


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