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Clients who take months to review

Do members on here raise invoices up front

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I tend to invoice after submission and only invoice clients up front if they have been bad payers historically. However, I have a very small number of clients for whom I produce a set of accounts but who then takes months to "get round" to reviewing them.

Do members on here have a policy of invoicing such clients up front? If so, do you bill them the full amount, or on a partial basis with the remainder on submission?

Thanks!

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By paul.benny
13th Nov 2019 14:51

Accountants in practice can be some of the worst at managing their own finances.

With the caveat that I'm not in practice (but with plenty of experience of credit management), I would suggest a billing schedule applicable to all clients. How about 30% when they provide initial documents, 50% on completion, 20% on filing. 30 day terms and if they don't pay, don't proceed to next stage.

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By SXGuy
13th Nov 2019 15:16

Half upfront balance due 4 weeks after on completion, if client wishes to take months to review that's fine but a) fee still due and will incur interest, and b) nothing gets filed.

Find that works quite well. Certainly NEVER submit anything till payment is received. Setting yourself up for a nasty downfall one day.

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Replying to SXGuy:
Hallerud at Easter
By DJKL
13th Nov 2019 15:47

Well I have got away with billing in arrears after work done/submitted and over the circa 12 years I have had no bad debts. Now I do have, since cessation on 30th September, a few fees still outstanding but I am near certain I will receive these this month (as the parties have confirmed they will pay this month).

If this proves false I will be disappointed as the parties concerned have been each been known to me for over 20 years.

Maybe I was just more fussy than most re taking on clients?

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By ireallyshouldknowthisbut
13th Nov 2019 16:03

Bill with accounts

Not filed until its paid.

Its really really simple and it works. Never had anyone query this method of billing in 15 odd years.

Most of my bills are paid on signature within 7-14 days. We don't offer credit terms (they are due on issue) and follow up after 2-3 weeks. Our oldest current debt is 45 days (will pay but we know they are broke), next one down is 28. Debtors days are approx 14 days.

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Replying to ireallyshouldknowthisbut:
Me!
By nigelburge
19th Nov 2019 12:21

Exactly. This.
If I haven't had a response by 3 weeks, I politely remind them.
If still nothing, I inform them that my fees are overdue.
Simple really.
If they don't like it, they can go elsewhere, but funnily enough, that is very rare.

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By penelope pitstop
14th Nov 2019 00:43

Sainsbury's are more than happy for me to pay them 6 months after I have eaten and supped all the groceries/beverages purchased! I think not.

Bill them in the same envelope as the tax return/accounts. It's really what they expect, and it cuts down on expensive postage.

As one experienced accountant once said to me: "NEVER ACT AS A BANK FOR YOUR CLIENTS!"

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By marks
14th Nov 2019 06:29

Monthly by DD so by their year end their fee is paid.

This is what we do so the fee is paid plus more for the next year before we even start the work.

Works for us as we know what is coming in each month.

Works for the client as lots of services they buy eg gas/electricity, netflix, council tax, etc charge them monthly so they are used to it.

We are a service so why should we charge any differently to any other service they use. Plus we are on hand during the year to answer any questions they have. Again your fixed fee should include provision for this.

Certainly wouldnt do the work without having been paid before starting. Just leaves you exposed to a bad debt or the hassle of having to chase them for payment.

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Replying to marks:
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By Mr_awol
14th Nov 2019 11:08

marks wrote:

We are a service so why should we charge any differently to any other service they use. Plus we are on hand during the year to answer any questions they have. Again your fixed fee should include provision for this.

Certainly wouldnt do the work without having been paid before starting. Just leaves you exposed to a bad debt or the hassle of having to chase them for payment.

This niggles me a little bit. I know it's something the self styled practice gurus like to spout, but professional services are, in my mind, entirely different to a mobile phone contract.

Presumably if you move house you'll have no problem with paying the estate agent up front, or a monthly retainer to market your property? Or will you expect them to supply a service at their own risk and get paid when you have the sale proceeds, like everyone else does and as is 'the norm' for their industry?

Aside from that, we are in business, and have to accept the risks of that as well as the rewards. If a car dealer wanted me to pay up front so he could source, service, improve and sell a car to me then I'd tell him to jog on - or expect to receive a hefty reduction in price. I don't begrudge him making a £2k or so profit when he's taken a chance on speculatively buying stock for resale but I do if he's simply acting as agent.

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Replying to marks:
By Moonbeam
14th Nov 2019 11:36

I agree wholeheartedly with Marks on this one. I bill ltd co clients individually a small fee for their personal tax returns. The fee is billed in advance. Xero chases it periodically but I won't do the work until it is paid. One client always takes several months to pay, but it's no problem to me as I'm not out of pocket.
Maybe not all accountants provide a continuous service, but I certainly do. The monthly charges are fair and reasonable in my opinion and presumably my clients agree.

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Replying to marks:
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By Ian Lawrence
19th Nov 2019 11:25

I do the same, monthly paid by standing order. We usually have monthly payroll, queries during the year, quarterly VAT often on software now (MTD), end of tax year dividends so actually a relatively small amount of our time is spent at year end. We therefore take these payments to our P&L when paid. Only a couple of clients have wanted a bill when I do the work and we have accepted this. It would be interesting to know if anyone has sold a practice and had to negotiate a lower sale price because fees are being paid "upfront"

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By Mr_awol
14th Nov 2019 09:33

Bill for complete job is sent with the accounts/TRs (sometimes draft accounts sent, but as they are always 90% complete by then I will bill in full - but not for TRs if not prepared.

Some pay Standing Order (POA, not subscription) some pay on presentation. Some drag their heels but in the last ten years I've probably had bad debts of less than £5k so it normally comes in eventually.

Easy for us with a cash balance and I can see why smaller firms try and get as much up front as possible but I really don't think it's right to invoice before the work is done. Pau's response about stage payments sounds like a nightmare to me - I'd probably spend more time invoicing clients and tracking payments each year than I lose in bad debts by doing it my way.

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By bettybobbymeggie
14th Nov 2019 12:01

Interesting reading this. I don't mind the pay-monthly arrangement but less than 4% of my clients pay this way because I have never encouraged it. I probably need to impose it on my 'problem' clients because they are driving me mad. I am not bothered about most of the others because they pay up. I have invoiced in arrears more or less without fail. I am surprised so many members here invoice in advance of submission. Food for thought!

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By bernard michael
14th Nov 2019 14:58

I send the invoice with the accounts for signing. When received back promptly I tell the client that I cannot submit the accounts until approval given. This normally prompts a/cs & invoice payment being received

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Hallerud at Easter
By DJKL
16th Nov 2019 00:07

Client comes to you and asks if he ought to pay x in advance for some work/service and you likely advise him not to, the risks etc, yet some of you expect clients to pay your firm in advance of it performing work.

What if you do not perform, drop dead, do a runner?

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By Matrix
16th Nov 2019 08:00

Clients where I do monthly work or who have cloud bookkeeping for example tend to pay monthly.

Clients where I just do the annual accounts pay annually and I bill at the same time as I send the accounts for review for payment within 30 days.

Many clients are slow to review but it doesn’t make that much difference if they have paid me or not. I tend to turn around the monthly payers faster since they have paid and I usually have their figures earlier too.

I would never file accounts or tax returns without having been paid.

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By tdculverhouse
19th Nov 2019 11:07

A fellow partner of mine in my previous accounting firm told me whilst he was educating me about client billing - "Always bill them (clients) whilst the tears of appreciation are rolling down their faces." - I've done that to this date. Bill clients whilst the work you've done is fresh in their minds (as well as yours) and they can recall the value / tax savings / promptness etc.

I echo the sentiments on here wholeheartedly that bills should be paid before anything is submitted too - it's your best leverage to getting paid - the only reason to do this is if you have a PG but that can be a bit of overkill to be honest for most clients in the SME market.

In your circumstances I would issue an invoice and say that as a large proportion of the work on the annual affairs has been completed you are invoicing them for the work carried out - and heavily caveat to ensure that they don't think this is the final bill - I've often found that the post review or responses from clients can lead to just as much work....

Consider also seeing if some of your clients will move to paying on account. Just tread carefully to ensure you are not starting their standing orders 10 months into their accounting year as by the time you come to their year end and potentially doing the accounts you may have only had 5-6 payments. For new clients mid year I calculate an approximate fee (and again caveat that this is a payment on account not full payment) divide by 12 and then ask them for the number of months into their year end they are up front and a standing order for the balance. To date I've not had a single client quibble - the only adjustment I made was to a 6 month mid year take on where we adjusted the next 6 payments to be the full year cost then reverted back to a twelfth per month once the year end passed.

I think clients appreciate and understand us being business like in our own affairs and often I've seen clients take the approaches I use into their own invoicing methods and suddenly cashflow blossoms.

Best of luck!

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Replying to tdculverhouse:
Me!
By nigelburge
19th Nov 2019 12:27

tdculverhouse wrote:

"Always bill them (clients) whilst the tears of appreciation are rolling down their faces."


This is 100% correct.
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By KH
19th Nov 2019 13:50

Bill them up front, and then head straight for the very old and rare single malts ... if you're good, you will still have a stack of these in the cellar from appreciative clients...... YES!

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