I am interested to know how other firms have dealt with monthly billing for clients. We are quite small and I have read all about the theory but I don't have access to any practical answers.
Firstly do you raise monthly invoices or can this be covered by a yearly summary, and are there any issues regarding vat?
Secondly how do you calculate the amount to be charged monthly, is it as simple as - Work out the annual fee divide by 12 and request this amount per month regardless of start date or are the payments related to a particular point during the year, for example the clients year end date.
Thirdly, how do you implement this with clients who already have debts to clear.
If anyone could point me in the direction of resources to find these answers I would be very grateful.
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Pidi monthly
There are two typesof monthly billing. The first is when a bill is sent out month for the WIP but with a lower limit so that tiny bills are not sent.
We use fixed fee billing wherever possible. Having agreed the fee we have it paid in 10 instalments which gives two months to agree the next years fee. However if we are now agreeing for the 2009 SA100 etc then it will be over 4 months. We are in a recession and we are agreeing fees for 2009 and 2010 and in this case payment is taken for the two periods over 10 months. Certainly those clients who run into financial difficulties have paid a portion of the annual fee and in some cases we are allowing them to pay the remainder over a longer period.
How to implement. All new clients go on 10 monthly no exceptions, if we have no idea of the fee then the monthly payment is still made but as a payment on account. For the remainder we mention it every time we speak with a client and have sent out a standard type letter. Along the lines "in response to requests from clients we have now introduced monthly billing,.......
You will have some resistance and it is just not right for some clients but over aperiod it will pay dividends. Don't forget to sety up a spreadsheet so that you can see who misses a payment and when the 10 months are up and allow the bookkeeper extra time.