Monthly Payment of fixed fee
Hi,
I am a new practice that has only been established for 3 months. I operate on a fixed fee basis and I ask the client to pay these monthly.
I've recently had an enquiry from a ltd company who is nearing their year end. I'm wondering how other accountants structure their fee's on instances like this.
If I charge my fixed fee monthly then the client will have only paid for a few months yet I will have produced the year-end accounts etc and they will still need to pay me the remainder of my fee.
Should I offer a quote for producing their accounts at the year end 30th March which is payable when I have completed them & then revert to the monthly fee for the next year's set of accounts.
I would really appreciate some advice from someone more experienced in practice.
Thanks
Tracy
An option
Here's an option that I use which may work for you - I called it pay-as-you-go:
Set up two standing orders for the two fees. One for four months starting now for the March 2010 accounts and one starting next month for the year-ended March 2011. Allow clients to call you in the year with matters related to the accounts e.g. bookkeeping for free.
By the way, it may be best to look at getting registered so you can receive direct debits so you can increase the fee without hassle and pick up any extra work orders.
Also, think about having payment over 10 months and have a renewal plan
Bob
Be bold
In my firm we charge monthly, but on a "pay as you go" basis. That means that new customers start on the agreed monthly fee regardless of how close we are time-wise to the year end. The corollary is that, where a customer leaves, they don't get a refund if we haven't done their accounts yet.
This is easy to understand for everyone (we use pay as you go mobile phones as an analogy) and demonstrates our confidence to the new customer - that we are prepared to take the "risk" because we know they will stay for the long term, once they have experienced our service.
Before anyone asks, what we do when a customer tells us they want to leave is to advise them to keep paying until we have completed their accounts or any other outstanding work - after which they can cancel their standing order. We commit to getting the work done as quickly as possible.
I know this might sound like a radical approach to some, but it works and we have never had any problems with it.
50p to collect money seems cheap to me
I think 50p per transaction is not expensive to collect in fees. I do appreciate that there is a hassle in changing over standing order arrangements but this is a one-off exercise. One has to think long term.
Another option is Paypal's recurring payments feature.
It seems everyone takes monthly payments nowdays .............
We don't accept monthly payments - who needs the hassle.
When we get the client's records we prepare the accounts and they pay, in full, before they get them back and before the return is submitted.
No payment means fines by HMRC and no books to do a return from.
Its worked for 40 years and I just dont want the hassle of monthly payments.
Usually ....
Payment in full for this year (or say 3 monthly payments of 1/3rd of fee) then set them up with normal monthly payments from there on to cover next years acounts.