Fee notes for work done in a month already closed
What a law practice can do when a fee note belongs to a month whose books are closed: date it in the open month, or reopen with a second approver.
By Achekam · · 4 min read · For Legal businesses in South Africa, Nigeria, Kenya
It happens in every practice. The bookkeeper closed March on the tenth of April, the management accounts went to the partners, and on the fifteenth a senior associate mentions that she never billed the urgent application she ran at the end of March. The work was done in March. The fee note, naturally, should say March. Achekam refuses it.
That refusal is not a fault. It is the books protecting a month that someone has already checked, reported on and signed off. This article explains the choices a law practice in South Africa, Nigeria or Kenya has when a fee note belongs to a closed month, how to decide between them, and how to stop it happening every month.
Why a closed month refuses the fee note
Months can be soft-closed, hard-closed and locked, and a closed month refuses postings from every source. Issuing a fee note posts it to the ledger as debtors, fees and output VAT, so a fee note dated in a closed month is a posting into that month, and it is refused. The same applies to a manual journal: one dated in a closed month is refused too.
Before a month is closed, the screen checks the ledger balances and that no posting suggestions, unposted bills or unmatched bank lines are waiting. Unbilled work is not on that list, because the books cannot know about work nobody has billed. Catching late fee notes is a practice habit, not something the close can do for you.
Dating the fee note in the open month instead
For most late fee notes, the simplest answer is the right one: date the fee note in the current, open month and issue it. The client receives a fee note with today's date for work done a few weeks earlier, which is entirely normal. Describe the work with its dates in the line text, for example "Urgent application, heard on [date]", so the client sees what period it covers.
The effect on the books is a timing shift. The fee income appears in the month the fee note is dated, not the month the work was done. For monthly management accounts that is usually acceptable, provided it is not the same associate every month and not a large amount. The general principle of matching income to the period in which it was earned is explained in AccountingTools' note on the accruals concept, and it is the principle your accountant will weigh at year end.
VAT at the rate in force on the fee note's date
The date also matters for VAT. When a line states no rate, VAT is taken at the rate in force on the fee note's date. Ask your adviser how the date affects the VAT period you report the fee note in; for most practices, reporting follows the date on the document.
Dating in the open month is generally simpler than reaching back: a fee note slotted into a closed month may belong to a VAT period already submitted, which could mean correcting a return. If the rate changed between the month of the work and the date of the fee note, take advice before issuing; the date you choose decides the rate.
When reopening is justified, and the second approver it needs
Sometimes dating in the open month is not good enough:
- the closed month is the practice's financial year end, and the fee is large enough to change the year's results;
- an auditor or lender is relying on the closed month's figures;
- the fee note must match a court order or agreement that names a specific period.
In those cases the month can be reopened, but not by one person alone. Reopening a hard close needs a second approver. Write down the reason, have the partner responsible for the books approve it, issue the fee note, and close the month again. Then tell whoever received the closed month's figures that they have changed. The stages of closing and locking are explained in locking closed months.
| Situation | Usual answer |
|---|---|
| Small fee, ordinary month | Date it in the open month |
| Large fee, ordinary month | Date it in the open month and note it in the management pack |
| Any material fee in the year-end month | Discuss reopening with the partner and the accountant |
| A month whose VAT return is already submitted | Date it in the open month unless your adviser says otherwise |
Correcting a fee note that went out with the wrong date
Sometimes the problem is the reverse: a fee note was issued in the open month with a date that was simply wrong. An issued fee note is not edited. If nothing has been paid or credited against it, an administrator can void it, which reverses its journal, and a fresh fee note can be issued with the right date. Otherwise, issue a credit note from the fee note, in full, and then a new fee note. A credit note uses its original fee note's date and tax codes, so the VAT reverses on the same basis it was charged. How fee notes move from draft to issued is set out in fee notes from draft to issued.
Habits that stop late fee notes piling up
- Before closing a month, ask every fee earner in writing whether anything is unbilled.
- Keep fee notes as drafts as work happens, and issue them at month end.
- Close the month a few days later if the practice keeps missing work, rather than reopening it often.
- Report late fee notes in the management pack, by fee earner, so the pattern is visible.
- Agree with the partners which months may never be reopened, such as the year end once audited.
Start with the first habit at the next month end. A two-line e-mail to fee earners before the close costs nothing and catches most late work while it can still go into the right month.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
