Query re charging

Query re charging

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I have just secured my first Ltd company client (Yay!) 

We have discussed and agreed the fee and I am in the process of setting out my engagement letter. The fee is small, the company is in it's first year and I anticipate there being very little in the way of transactions.

The client has asked how and when I would like payment. My first instinct was when the accounts are complete, however that is a year away and I have expressed that I will be available for advice and will register the company for CT. It therefore seems a long way off from securing the client to receiving payment.

So I am just interested as to how other people deal with this. I have considered monthly payments, but as I said this isn't a huge fee. 

Any opinions welcome. 

Replies (11)

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Universe
By SteveOH
01st Jul 2014 22:20

Monthly direct debit

It's a no brainer. You offer this client unlimited email and telephone support during the year, don't you? So you will be working on their affairs probably every month, especially as it's a new company.

Start as you mean to go on and charge them monthly. Not only does it ease your own cash flow (as well as theirs) but it means that, should they leave you for some reason or the business does not work out, you will at least have been paid for work done up to that point.

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By SJBarrow
01st Jul 2014 22:34

Thanks, I did think that..
I just need to be a bit more gutsy in finalising the payment process. (I.e requesting payment).

I assume you adopt this process for all clients including sole traders etc?.

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Universe
By SteveOH
01st Jul 2014 22:59

Yes, all clients

ALL my clients are on direct debit. The only time they pay on an invoice is when the work is for a year already passed. And even then, they must settle the invoice prior to me filing the Tax Return.

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By SJBarrow
01st Jul 2014 23:12

Thanks SteveOH. I will start as I mean to go on.

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By morgani
02nd Jul 2014 10:32

Direct Debit

We also do direct debit.  Very small clients we allow to pay annually such as individuals with rental income etc but encourage monthly payments.  Everyone else is on a monthly direct debit.  It works well for cash flow for both us and them and means we spend less time chasing payment.

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By ShirleyM
02nd Jul 2014 10:47

We give clients a choice

Monthly direct debit, with final payment to be received before submission of tax return, or 50% up front with the balance payable before submission. The latter is the most popular choice for clients with smaller fees.

Having some fees up front means we can provide (up to 12 months) support without fear of not being paid.

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By Carolynne
02nd Jul 2014 11:28

Monthly S/O

I also receive payment monthly by standing order from each client.  And only invoice for additional work done.  I then say this includes advice and help throughout the year too, so that if they leave, I can keep a proportion of what I have received.  New clients who have not paid for the whole year, have to pay any residual amount owing before I submit any returns for them, thereafter they have always paid in full before the returns are due.  Some new clients who need a lot doing at the beginning, are asked for an up front retainer (covering my time), so that if they don't pay any more and leave, I have at least covered my time without any profit, but am not really out of pocket.  (This hasn't happened yet, but you never know)!

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By SJBarrow
02nd Jul 2014 12:14

Advice noted, thank you

Thank you all so much.

My first couple of SA clients I requested payment when the work was done, they were quick turnarounds and didn't pose any problems. I am however taking all your advice onbaord and opting for direct debits.

As with fees I will review each individually and tailor this if need be but as a standard approach I'm now sorted.

I have also responded to my client with the proposal, so I've even taken that first step.

 

 

 

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By Carolynne
02nd Jul 2014 12:36

S/O or DD

I have a question about DD'./  Having always used S/O's, does it cost much to use DD's how would I go about this.  As I was thinking of when taking on future clients, incorporating a 3% rise in their fee annually, which I could do if I used DD's instead of S/O's?

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By SJBarrow
02nd Jul 2014 12:38

GoCardless

On the back of the responses from here, I had a look at gocardless, they charge 1% or maximum £2 of the fee.

I haven't looked into any others as yet.

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By ShirleyM
02nd Jul 2014 12:41

@Carolynne

There are many D/D service providers around now. Many on here use GoCardless.

Direct debit is also useful for those one-off additional charges, or those clients who pay on a time basis (eg. monthly bookkeeping), as the invoice can be raised and payment collected by d/d.

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