Clio Accounting - A Cautious Look at the New Kid on the Block

The legal tech landscape is abuzz with the arrival of Clio Accounting, the latest offering from Clio, a name synonymous with legal practice management software. On the surface, it promises a streamlined, all-in-one solution for attorneys seeking to simplify their financial management.  The allure of an integrated platform from a trusted provider is undeniable, especially for solo practitioners and small firms already familiar with the Clio ecosystem. However, a deeper dive reveals some critical limitations that warrant careful consideration before taking the plunge. While the software boasts a user-friendly design and simplifies basic bookkeeping tasks, its shortcomings in integration, data portability, and key features raise concerns about its suitability for firms eyeing future growth or requiring robust accounting capabilities. 

Clio Accounting boasts a clean, user-friendly interface—a hallmark of Clio products.  The three-way bank reconciliation feature is a definite win, simplifying a critical bookkeeping aspect. However, several shortcomings might give potential users pause:

Standalone Software, Not an Integrated Solution

I see the draw to having one solution, not multiple software options. However, I can also see its downfall. Contrary to what might be expected, Clio Accounting is an authentic stand-alone product. This significant drawback eliminates the efficiency gains of adding multiple software to enable the efficiency of data import, like receipt capture or specialized reporting. 

Data Migration: A One-Way Street

To set up the new Clio Accounting system, it is essential to note that you will not be importing any data from QuickBooks or Clio. Instead, you must manually enter your balance sheet opening entries for the fiscal year (or trial balance entries) to establish your beginning balances. 

If I were to advise a client on making this transition, I recommend doing so on January 1st rather than mid-August. Clio does provide a pre-set chart of accounts for new users; however, please be aware that this chart is quite basic and may require further customization to meet your specific needs.

But what if I grow out of Clio Accounting?

The most concerning limitation is migrating data out of Clio Accounting if your firm grows. Once your financial data is in the system, there's no easy way to export it to another platform. This creates a significant vendor lock-in situation, potentially limiting your options should you outgrow the software or find it necessary to meet your evolving needs.

Missing Features for Growing Firms

• Limited Reporting: This product is NEW! Clio Accounting currently offers basic reporting functionalities. Firms requiring in-depth financial analysis or custom reports will find the current options needing improvement.

• No Check Printing
• No Payroll: Core features like payroll are absent, making it unsuitable for firms that still need to embrace fully digital payment systems or have employees.
• Zero integrations for enhanced technology
• Cash basis accounting only
• The banking connections only work with banks that connect to the Plaid system. Your bank may not connect with Clio Accounting.

The Verdict: Proceed with Caution

Clio Accounting might appeal to solo practitioners seeking a simple, standalone solution for basic bookkeeping. This ledger system added to Clio Manage is a risky choice for firms anticipating growth or requiring robust accounting capabilities. The inability to migrate data in or out of Clio Accounting and missing features make it a risky choice.  

Before taking the plunge, carefully consider the long-term implications of these limitations. Get the advice from an accounting expert.

“Clio Accounting might simplify your bookkeeping today but could box you down the road.”

Selecting the appropriate accounting software is essential for any law firm. While Clio Accounting offers an appealing, user-friendly interface and strong brand recognition, it is vital to acknowledge its limitations. Firms, particularly those with growth aspirations and need comprehensive financial management, should thoroughly evaluate the advantages and disadvantages before committing to a platform that may impose future restrictions. Notably, the inability to convert to QuickBooks or Xero and the challenges associated with data migration are significant drawbacks that could result in complications and additional costs.

Who will this software work best for?

The solo attorney does not plan on growing their firm. They may keep their data on a spreadsheet for their general accounting needs. They may use Clio Manage, and this would be a great transition to stop the spreadsheet and add Clio Accounting to track their income and expenses.

I am encouraged to see Clio developing an all-in-one solution tailored for attorneys. They will enhance this software in the next few years to address the shortcomings of this initial roll-out. This product is much like the initial versions of QuickBooks Online 10 years ago, with all its quirks.  We just have to be patient and watch it grow.

As with any software decision, a thorough assessment of current and future needs and a realistic evaluation of Clio Accounting's capabilities is essential to making an informed choice that aligns with your firm's long-term goals.