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Disbursements in Nojumi

Disbursements represent out-of-pocket expenses that you incur from your law firm's account on behalf of a client. Disbursements are added to matters as Entries to ensure you get reimbursed for these types of expenses.

When you incur an expense on behalf of a client from your general account or your credit card, you may wish to get reimbursed, depending on the nature of the retainer agreement between you and the client. 

Dibursements are a type of entry that are added to the matter to ensure you get reimbursed. When you issue an invoice on a matter that has disbursements added to it, the disbursements will end up on your invoice. 

You should note that disbursements are different from expenses and supplier bills. Disbursements get added as an entry and end up on your invoice and as such increase your accounts receivable and ultimately your revenue when you are reimbursed. 

Expenses and supplier bills on the other hand end up in the expense section of your Income Statement and therefore reduce the net profit. 

To properly record an an expense incurred on behalf of a client therefore you would have to take the following steps:

  1. Record the payment as an expense or a supplier bill. This results in increasing the expense section of your income statement.
  2. Record the payment as a disbursement on the matter. This results in increasing the revenue section of your income statement.

Steps 1 and 2 will therefore will cancel each other out and will result in net profit on the income statement remaining the same, which is the desired outcome, as a disbursement for which you are reimbursed should not impact your firm's financial position.