Automating Disbursement as Expenses

Disbursements in Nojumi

Disbursements in Nojumi are out-of-pocket costs paid by the law firm, using a general account or credit card to a third-party supplier on behalf of a specific client. 

It is critical to distinguish Disbursements from standard Expenses or Supplier Bills, as they affect your books in completely different ways:

• Disbursements: These are added as entries that can be added directly on a client's invoice. They increase your Accounts Receivable and eventually count toward your Revenue once the client pays you back.
• Expenses & Supplier Bills: These are operational costs of running your firm (like courier fees or legal tech). They are recorded in the expense section of your Income Statement and directly reduce your Net Profit.

Managing your Disbursements

One of the most common leaks in a law firm occurs when a disbursement is billed to a client but forgotten on the firm's own ledger. Firms must input both revenue for the reimbursement and expense for the disbursement, creating an unnecessary step of manually entering the same data twice.

Moreover, many softwares record the client’s payment for a disbursement as income, but fail to properly track the money you initially spent as an expense. Unlike other softwares, Nojumi automatically creates an expense when a disbursement is recorded to help reconcile the artificial increase in income.

Why does this matter?

Because the firm has already spent its own capital to move the case forward, these entries are a top priority; you have paid first, and the goal is to be reimbursed by the client as quickly as possible. 

• Balanced Books: It isn't just recorded as income when the client pays you back. It is also recorded as an expense because you paid your own money out for the disbursement. Nojumi ensures your financial statements reflect the actual net gain of every transaction.
• Tax Protection: By ensuring every reimbursement is offset by its corresponding expense, Nojumi keeps your taxable income accurate. You only pay taxes on your actual earnings, not on your reimbursed costs. If you only see the income, your profit looks artificially high. By automatically recording the expense, you lower your tax payable for the entire firm.
• Flat Disbursement Fees: In some circumstances where your firm may have a discrepancy between your disbursement and expenses, Nojumi will provide the correct book keeping required to ensure your firm is reimbursed for exactly what it spent, protecting yourself from hidden out-of-pocket costs.