Hard Costs vs. Soft Costs
When recording the payment of expenses on behalf of a client, some firms differentiate between hard and soft costs.
Hard costs (aka Disbursements in some European countries) are charges incurred on behalf of a client that requires a direct payment by the firm to a vendor. For example, if a firm writes a check for a court filing fee, it is considered a hard cost.
Soft costs are expenses that are charged to the client but a direct payment is not made to a vendor. For example, if a firm charges for photocopies using their own photocopy machine, they did not pay a vendor directly for those specific copies.
Enabling or Disabling Hard and Soft Costs
To enable or disable hard costs/disbursements and soft costs:
- Go to the Settings menu
- Click Billing
- Click Expenses
- Click the checkbox for Enable recording of soft and hard costs for reimbursable expenses
- Click Save expenses settings
Note: EU Customers will see a slightly different settings screen:
Entering Expenses as Hard Costs/Disbursements or Soft Costs
To enter expenses as hard or soft costs:
- Click the Create new button, or the New expense button
- In the New expense entry window:
- Select if the expense is a hard or soft cost
- Select the expense category (optional)
- For hard costs, enter the total amount you paid on behalf of the client
- For soft costs, enter the quantity of and the rate for the expenses
- Select the relevant Matter
- Add a description
- Ensure the date is correct
- Ensure the firm user is correct
- Click Save entry
Note: EU Customers will see a slightly different Expense Entry modal.
If the box is checked, Expense will be saved as a Hard Cost (Disbursement).
If the box is unchecked, the Expense will be saved as a Soft Cost.