What actually goes wrong
Ask a firm why disbursements are under-recovered and the answer is usually about discipline: people should submit receipts, fee earners should code costs, everyone should be more careful.
That answer has been tried in most firms and has not worked in any of them, because the problem is structural rather than behavioural. Costs arrive from six directions, in five formats, at unpredictable times, and each one requires a person to read it before it becomes anything a system can use. Any process that depends on all of that happening promptly will fail in exactly the places it is failing now.
What does work is removing the reading, making the destination trivial, and running one comparison that finds the costs nobody submitted. That is what these eight steps are, and the seventh is the one that finds money.
The guide assumes a professional practice recharging third-party costs to clients — legal, surveying, consulting, agency. The mechanics are the same in all of them; only the vocabulary differs.
What this guide is not
Not legal or regulatory advice
What may be recharged, how it must be disclosed and what records your regulator expects differ by profession and jurisdiction. Those questions belong to your compliance lead or professional body.
Not about holding client money
Nothing here touches funds held on a client's behalf. That is a regulated activity with its own rules, and this guide is about costs the firm has paid from its own account.
Not a substitute for your engagement letter
Whether a specific cost is recoverable is settled by what you agreed with the client. No process can create an agreement that was never made.
Three decisions to make once
Ten minutes each, and each one determines the shape of everything after it.
One: who owns the record. One person holds the disbursement table; everyone else feeds it. Two people maintaining two lists produces a reconciliation problem on top of the original problem.
Two: one row per document line, never per supplier or per week. Rows aggregate into any summary you like. A summary cannot be split back into rows, and the moment a client queries one line you will need the row.
Three: which costs are recoverable, as a firm. Not case by case — write down your position on travel, couriers, printing and out-of-hours work. Where this is unwritten, every fee earner decides individually and the same client is charged differently on two matters, which is a harder conversation than any policy.
1 · Map where costs actually arrive from
Not where they are supposed to arrive from. Write down, honestly, every route by which the firm currently spends money on a client's behalf.
| Channel | Typical costs | Why it leaks |
|---|---|---|
| Supplier invoices by email | Experts, counsel, agencies | Sits in one person's inbox |
| Supplier portals | Searches, registry, filings | Nobody downloads until asked |
| Firm card | Couriers, urgent fees, travel | The line exists; the receipt does not |
| Personal card | Parking, small purchases, subsistence | Claimed late, or never |
| Paper fee notes | Counsel, some experts | Arrives weeks after the work |
| Monthly supplier statements | High-volume providers | Posted as one figure |
Every entry in the right-hand column is the same sentence in different clothes: the cost exists, but not somewhere anyone is looking. The map is worth keeping, because it is also the list you check against when something turns out to be missing.
2 · One place to send a cost document
A single destination — a mailbox, a folder, an app — reachable in about two seconds by somebody holding a receipt.
Two seconds is not a figure of speech. If sending a receipt takes four steps, it will be done at the end of the month or not at all, and no reminder changes that. The fix is to remove steps, not to remind people about them.
For recurring suppliers there is a better move available: ask them to invoice that address directly instead of a named person. It is one email to the supplier, it works permanently, and it removes the single most common cause of a document never arriving — the person who normally receives it being on holiday.
Portals cannot be solved that way. There the only thing that works is downloading at the moment the payment appears, because several portals keep only a few months of history and the missing ones are always the oldest.
3 · Read the month's documents into rows
Now the pile becomes a table. Up to a hundred files in one pass, and out comes one row per document — supplier, dates, description as written, net, VAT by rate, gross — with the file and page kept on every row.
Do the first month in a single sitting rather than as documents arrive. Not because it is faster, though it is, but because the shape of the whole month is visible at once and that is where the surprises are: the supplier nobody remembered, the duplicate, the cost twice the size it should be.
Photographs and scans go through the same reading. A crumpled till receipt photographed in a corridor works; the confidence on individual fields is lower and that gets flagged rather than hidden, so the handful of rows worth a second look are marked.
What comes out of this step is not yet a disbursement record. It is a complete list of costs, which is the thing most firms have never actually had.
The reading step, on camera
Step three, done once end to end against the live product — a document chosen from the computer, read, checked, and opened as a spreadsheet.
Upload to finished spreadsheet in under a minute, unedited.
Every figure checked against the document's own totals before export.
The real .xlsx is opened at the end — data, not a picture of data.
Recorded on a sample document from a fictional supplier — no client data appears in this video.
4 · Split the bulk statements
This step takes ten minutes a month and recovers more than any other single thing in the guide.
A monthly account from a search provider, a courier or a print firm covers dozens of jobs across dozens of matters. Posted as one figure to one code — which is what happens when it is treated as a document rather than as a list — every recoverable cost inside it stops being recoverable in that instant. No decision was made; the shape of the document made it.
Read as lines, the same statement is forty rows with dates, references and amounts, each able to carry its own matter and its own flag. Two may be internal and thirty-eight billable, which is a distinction that simply does not exist in the total.
The test for whether this matters at your firm is quick: look at the three largest supplier accounts and ask whether each one is currently posted as a single line. If it is, that is where the missing money is.
5 · Attach each cost to a matter
Some documents name the matter — a reference in the description, a case number, a property address. Those allocate themselves and should not take anyone's time.
The rest need a person, and the useful discipline is to leave the field blank rather than guess. A blank is a short list somebody can clear in twenty minutes; a guess is an allocation that looks finished, and a wrong allocation charges one client for another's cost — which is worse than not charging at all.
Route the blanks to whoever incurred them rather than to whoever is tidying the list. The person who ordered the search knows immediately; the person reconciling has to ask, and asking is the step that takes days.
Where the same supplier always relates to the same kind of work, a default saves real time — but keep it to cases where it has been true every time, not merely most of the time. Mechanically this is the same job as dimension tagging, and it stops at the matter: whether the client pays is the next step and a different question.
6 · Decide recoverable, absorbed, or not yet decided
Three states, not two. The third is what makes the process visible, and firms that skip it lose the ability to tell a decision from an omission.
Recoverable — goes on the next bill for that matter, at the amount you decide to recover, which may not be what the supplier charged.
Absorbed — a decision the firm made, with a one-line reason. This is a legitimate and often sensible outcome.
Not yet decided — nobody has looked. This is a list, and clearing it is part of preparing a bill rather than an optional tidy-up.
The one-line reason costs seconds and settles arguments a year later. “Agreed at scoping call”, “outside fixed fee”, “our error” — four words, written while the answer is obvious, retrievable when it no longer is.
Detail on how the flag behaves, and why a two-value version quietly loses money, is on recoverable cost flagging.
7 · Reconcile against the card and bank
Every step so far improves a record of the costs you have. This one is the only step that tells you about the costs you do not.
Read the card and bank statements into rows alongside the documents, and compare. A payment to a supplier with no cost document behind it is a disbursement with no evidence — and if it was recharged anyway, it is a bill line that cannot be defended if it is ever queried.
In practice the mismatches fall into three groups, and each has a different fix. A document that exists but was never sent — chase the person. A payment for something that was not a disbursement at all — fine, code it and move on. And a payment nobody can identify — which is worth knowing about for reasons beyond billing.
Half an hour a month, and it is the half hour that pays for the entire process. Statements come in the same way as everything else; the route is on bank statement to Excel.
8 · Bill what is decided, age what is not
At billing time the list that matters is short: costs on this matter, not yet billed, undecided ones first. Everything else on the screen is noise at that moment.
What remains after the bill is the unbilled balance, and the only thing that keeps it healthy is ageing it. Sort by the date the cost was incurred, not the date the document arrived, and look at the oldest item.
A disbursement that has been sitting unbilled for six months is very unlikely to be recovered, and the useful moment to have known was five months ago. The number worth watching is not the size of the balance but the age of its oldest line — a large balance full of last month's costs is healthy; a small one containing something from February is not.
Keep both dates on every row and that report takes one sort. Keep only one and the question cannot be asked.
A month in practice
A twelve-person practice, roughly two hundred cost documents a month, four fee earners spending on client work and one person in finance.
Forty minutes. The month's documents go up in one pass — invoices, portal downloads, photographs of receipts, two supplier statements. Out comes a table of 214 rows, because the two statements contributed 61 lines between them rather than two.
Twenty minutes. Allocation. 168 rows carry a reference the document itself provides. 46 do not and go to the fee earners as a list, grouped by person, which is four short emails rather than forty-six questions.
Thirty minutes. Card and bank against documents. Nine payments have no document. Six are chased and arrive; two turn out to be firm costs miscoded; one is a subscription nobody could identify, which becomes a separate conversation.
Fifteen minutes.Flags. Most are obvious. Eleven go to “not yet decided” and are cleared by the relevant fee earner while preparing bills that week.
Under two hours for the month, and the number that surprised them was the 61 lines from two statements — costs that in the previous year would have been two postings to an overhead code.
The rhythm that holds
| When | What | Time |
|---|---|---|
| As it happens | Documents go to one place; portals downloaded at the payment | Seconds each |
| Monthly | Read the pile, split statements, allocate, reconcile to the card | About two hours |
| At each bill | Clear the undecided list for that matter | Minutes |
| Quarterly | Age the unbilled balance; look at the oldest line | Twenty minutes |
| Yearly | Re-map the channels — new suppliers and cards have appeared | Half an hour |
The yearly row is the one that gets dropped and quietly matters. Firms acquire suppliers, cards and subscriptions continuously, and a channel map from eighteen months ago is missing whichever ones were added since — which are precisely the ones nobody is watching.
Costs that arrive after the bill
Counsel invoices weeks late. An expert's fee note follows the report by a month. A supplier statement covers a period that spans two bills. This is normal and will not stop.
The decision worth making in advance is the threshold: below what amount does the firm simply absorb a late arrival rather than raise a supplementary bill? Deciding that once, in the calm, is very different from deciding it each time in the moment when re-billing feels awkward.
Most firms that write the number down find it lower than their behaviour implied — they had been absorbing costs well above the level they would have chosen, simply because each individual case felt too small to reopen.
The upstream fix matters more than the threshold, though. A cost that arrives late usually arrives late because nothing asked for it earlier. If an expert's fee note reliably follows the report by four weeks, the calendar entry belongs at the point the report arrives, not at the point the bill is prepared.
When several people are spending
Everything above is written as though one person handles this. Above about five fee earners that stops being true, and the failure mode changes shape.
With one person, costs are lost to time. With several, they are lost to ambiguity: each individual assumes the cost is somebody else's to record, and the ones that fall between two people fall permanently.
The person who spent it sends the document. Not the person who approved it, not finance — the one holding the receipt, on the day.
Finance allocates what the document identifies and returns the rest, grouped by person. Grouping matters: four people receiving one list each will clear it; forty-six individual queries will not be answered.
The fee earner clears the undecided list while preparing the bill, which is the only moment they have all the context anyway.
Written down, that is three sentences. Unwritten, it is the reason a fifth of a firm's costs sit in a general code.
Costs somebody paid out of their own pocket
A fee earner pays a court fee on a personal card because the office card was declined, buys a bundle of copies at a print shop on the way to a hearing, or takes a taxi and pays cash. These costs take a completely different route through a practice, and it is a route with two exits.
The first exit is the expense claim, which reaches finance and gets reimbursed. The second exit is nowhere: the amount was small, the receipt went into a bag, and nobody chased it. The second exit is used far more often than any practice believes, because the person who lost the money is the same person who would have to raise the claim, and they have quietly decided £11 is not worth the form.
That decision is theirs to make about their own reimbursement. It is not theirs to make about the client's bill — and yet the two are welded together, because the only record of the cost was the claim that never got raised.
Separate the two questions
The fix is to break the weld. A cost incurred on a matter should be recorded as a cost on the matter regardless of who paid for it and whether they want the money back. Reimbursement is a second, separate question about the same document.
In practice that means the same rule as everything else: the document goes to the one place, on the day, with the matter reference. Whether the person then claims it is a conversation between them and finance that no longer determines whether the client is billed.
Two details that cause arguments
The receipt is in an individual's name. For VAT recovery this matters, and the treatment depends on the cost type and your own position — worth settling once with your accountant rather than case by case at month end.
Cash receipts fade. Thermal till receipts are genuinely blank within a few months, so a photograph taken on the day is not a convenience, it is the only version that will still exist when a client queries the bill. A photograph reads as well as a PDF, so there is nothing lost by capturing it that way.
Practices that get this right tend to have one visible rule: photograph it before you put it away. Everything downstream can be fixed later; a receipt nobody photographed cannot.
Closing a matter without leaving costs behind
The final bill goes out, the file is closed, and three weeks later an invoice arrives for something done in month two. This is the point at which a practice discovers whether its process was real, because there is no longer a bill to put the cost on.
Closure should therefore have a checkpoint, and it takes about four minutes.
Is the unallocated list empty for this matter?
Anything still sitting there is a cost about to be lost, and this is the last moment somebody remembers what it was.
Are there costs flagged not-yet-decided?
Closing a matter converts every undecided cost into a waiver by default. That is fine if it is a decision and expensive if it is an oversight.
Which suppliers have not invoiced yet?
Searches, experts and counsel commonly invoice weeks in arrears. A one-line note of what is outstanding is worth more than any system.
Does the cost total agree with what was billed?
If not, the difference is either a deliberate write-off or a leak, and you have thirty seconds to find out which while the file is still open.
The third question is the one worth ritualising. Knowing that counsel's fee note and one expert report are still to come turns a surprise into an expectation, and an expected cost gets billed as a supplementary while an unexpected one gets absorbed to avoid an awkward conversation.
Some practices hold a small number of matters in a “billed, not closed” state for sixty days precisely for this. It costs nothing and it is the difference between a supplementary bill and a write-off.
Costs incurred in another currency
Foreign costs are a small proportion of most practices' spend and a disproportionate share of their billing arguments, because there are three defensible amounts and no obvious rule about which one the client pays.
| Amount | Where it comes from | Why it gets used |
|---|---|---|
| Invoice amount at the invoice-date rate | The document | It is the amount actually on the paperwork |
| The amount the card was debited | The bank statement | It is what the practice genuinely paid, fees included |
| Invoice amount at the billing-date rate | Whoever raises the bill | It is what the accounting system does by default |
The second is usually the right answer and the one practices reach for last. The debited amount is what left the account, it includes the card provider's conversion margin, and it is evidenced by a statement the client can be shown if they ask.
Whichever you choose, keep both the original currency amount and the converted one on the row. A cost recorded only in sterling cannot be checked against the supplier's invoice later, and foreign costs are exactly the ones that get checked.
Common mistakes
Posting supplier statements as one line. The single most expensive habit here, and the easiest to change.
Guessing the matter. A wrong allocation charges one client for another's cost and survives because the two errors cancel in the total.
Recording gross only. It is the number on the card statement and it is the one that cannot answer a VAT question later without reopening every document.
Skipping the card reconciliation. Then the process only ever improves the costs you already have, and never finds the ones you do not.
A two-state flag. Everything unseen defaults to one answer, and the firm permanently loses the difference between a waiver and a leak.
Tidying the description. The client will be shown the evidence. A paraphrase that does not match the document invites the one question you least want.
Checklist
Every channel written down, including personal cards, portals and paper.
One destination for cost documents, reachable in seconds.
Recurring suppliers asked to invoice that destination directly.
Portal documents downloaded at the payment, not at the period end.
The month's documents read into one table, one row per line.
Bulk supplier statements split into their lines.
Net, VAT and gross held separately on every row.
Matter attached where the document says so; blanks routed to whoever incurred them.
Every cost flagged recoverable, absorbed or not yet decided — with a reason.
Card and bank reconciled against the documents; unmatched payments chased.
Undecided list cleared as part of preparing each bill.
Unbilled balance aged by date incurred, oldest line reviewed.
Source file and page kept on every row.