Cash is king
We are living in a new era where many clients are facing financial difficulties. Accountants should take affirmative action to protect their practices. Philip Fisher suggests that accountants should now consider upfront billing or much tighter credit control policies.
You might also be interested in
Replies (12)
Please login or register to join the discussion.
I have said this so many times before, when we went to monthly fixed fees a few years ago it changed our life, the difference to the old days when we used to have to chase money is like night and day
Philip: thank you for the caring way you write this.
Surely, upfront billing must become (if it isn't already — and thankfully it is in so many firms now) 'the way we do it here'.
In so many ways, the Pandemic has rapidly accelerated the adoption of processes that always made sense for Accountants yet many refused to accept ..... until now.
It's one of the good things to come out of the most challenging situation for so many.
This really is a Defining Moment for the Profession.
As Tom Hood so beautifully put it: "This presents an amazing opportunity for our profession to play an important role to shape the future with insight and integrity. Businesses need you more than ever. This is your opportunity to make this your defining moment."
Please .......... don't miss it.
Phillip, this is one of the worst articles I have read in this forum. How we get paid is immaterial. Cash rich business will like to pay their bills by cash because it reduces their bank charges, didn't you know that?
Money laundering rules aren't there to catch a "normal" business out, they are there to catch drug dealers and the like. Why do you think that most of the reports sent in don't go anywhere and are not acted upon?
So Phillip what are you going to say to the person who does work for you when they ask you to pay for work before they start?
Monthly STO is what a lot of business now expect but to be paid upfront, you're aving a laugh.
So, Phillip, your idea is to hit business, when they've got little money, and are on a tightrope, with charges upfront. It's a bit like fining students £10,000 for breaking the covid rules.
Phillip, all I can say is you must have been a banker at some stage.
Since 2004, all my clients have paid by monthly standing order (as I work to fixed fees), and I have never had to chase a client for payment.
Those that I do ad hoc work for on top of their fixed fee, pay immediately I invoice them , because I have a good business relationship with them and have earned their respect. They can't wait to pay their additional bill, as they know I am a great helping hand to their business and are appreciative of the service I have given to them (even if their finances are very tight, they find a way to pay immediately).
Indeed, I have done some free additional work during furlough to show my support of them, and now that these businesses are up and running fully again, they have given me additional fee work to do and have paid straight away for this too.
This article seems very cold to me and seems to be basing its assumption that practices treat clients as numbers and have no business relationship at all.
The only time I would ask for payment up front, is if a new client came to me with a very tight deadline that required me to delay current work, in order to achieve this short notice work. As they are new and we don't know one another, they usually understand and pay without complaint. But this is the only time, I would ask for payment up front.
Rather tedious, reading old ground to get to the point under the final heading . And somewhat oxymoronic to head the article ''CASH IS KING'' followed by the bold sweeping statement that paid thus means living in the past. I have no problem being paid in this manner if the client so wishes but agree with the so obvious statement regarding care with recording paid invoices. It should be stressed that care is paramount whether cash , bank , barter whatever - and not single out one method of payment. Don't live in the past by assuming otherwise.
And I must confess that gender neutrality becoming de rigueur and adopting a patriarchal displeasure to the masculine portrayal thereof, is something I've never thought about particularly when it comes to billing .
N.H. has nicely summed up what the article omits and could have been replaced with.
I think this is poor, what businesses in their right mind wants to pay upfront for a service when they themselves will be struggling.
This would only encourage clients to leave, you don't need to spend much time on credit control at all if they are on Standing Order.
When signing on a new client sure, make them pay on presentation for any catch up accounts and then ask them to set a standing order up, the way we do it is that they are fully paid during the last month of their year end and then the accounts get produced / filed within 4 weeks of the year end.
The only people who aren't on standing order are small Tax return only fees.
By doing as you suggest you will only be making client retention harder.
Couldn't agree more with the general idea here. We at The Accountancy Practice have been migrating our clients towards monthly payments for some time now (and they don't mind) and have created a new monthly paid subscription service which is mandatory for all new clients. We are also completely transparent from the start with the client about what they are being charged for and take a lot of care to manage the client expectations upfront.
Quote from an ex-client stuck on a post-it note on the back of my office door - "you don't expect me to pay you before I pay myself do you".
Scenario;
Company A was in major financial difficulties.
Company A owed money to Company B.
Company B owned by director of Company A.
Director asks us to help Company A with bank, HMRC etc to try and save Company A. Promise that we'll get paid.
Bank eventually pulls plug on Company A.
Just prior to this Company A pays company B all monies outstanding.
Company A bumps us for thousands of pounds of work.
Fortunately not every one is like this but when the chips are down you come second and people are quite happy to take your expertise, time and life (you might as well be at home with the family than work for nothing).
I have that on the back of my door and see it every day so I never forget the feeling of trusting someone who then spat it back in my face.
Sympathies galore, however when you go into business you must realise there are good things and bad things, pretty much life as a whole. Wonderful holiday then suddenly tsunami, etc. etc.
There is an old saying which I think you may be referring to, "you can stay at home and lose money".
I've never done this and, whilst I've not been completely bad debt free, I've never had much of a problem getting paid.
Today I have had to speak to two different solicitors - one on my own behalf (non business problem!) and the other on behalf of a client.
Both solicitors asked for some payment up front.