Payment plans that provide cashflow support to both you and your clients
In the wake of COVID-19, many firms will have heard from clients whose cashflow has prevented them from paying their fee as scheduled. Other firms may have requests for additional services - cashflow forecasting or Coronavirus Job Retention Scheme support - that their clients are unable to pay for immediately. In fact, clients failing to pay invoices on time may be familiar ground for lots of practices, regardless of a global pandemic or unsteady economy. It can be difficult to charge a client in financial trouble, but in the cliché of ‘fitting your own oxygen mask before helping others with theirs,’ your own cashflow is equally as important as those of whom you are trying to accommodate. The good news is that there can be a middle ground.
Practice Ignition is a tool that guarantees you payment while allowing flexibility over the billing schedule and amount due. Clients with overdue invoices will often request to pay in a series of instalments, to spread their outgoings as much as possible. For some, a deposit and balance is relief enough. Other services may require you to bill on a sliding scale, depending on the success of the work. But how does establishing a payment schedule with a client actually guarantee receipt of payment?
Well, Practice Ignition is also a payment processor that allows you to capture your client’s payment details at the point of the agreement, even if the payment collection date(s) isn’t for some time. This way, you can start or continue to support your clients, in the knowledge that your own cashflow is also securely mapped out.
If you’ve been approached by new clients, or are adding additional services to your existing clients’ schedules, it can be nerve-wracking to charge on completion of the work. Businesses are experiencing more cashflow fluctuations than ever, so to invest resources in a project without guarantee or payment from them is a risky strategy for any accounting firm. Equally, when your own cashflow has suffered from some clients’ late payments, a billing schedule that delivers in a year’s time isn’t helpful in the immediate future. By taking a deposit amount upfront, firms can protect themselves against ‘working for nothing’ while also providing immediate relief from the cashflow damage of delayed payments from other clients.
Monthly Repayment Plans
Monthly repayment plans are a great option for clients whose trading has slowed and are no longer generating enough revenue each month to be able to pay your annual fee in full. Instead, they’ll pay a fixed proportion of the due amount on a monthly basis until their debt with you has been cleared. For clients whose trading has stopped altogether, it may be that you agree to a monthly repayment plan once they are able to open their doors again. Practice Ignition allows you to create a plan with a start date in the future and gives you the option to edit this as many times as you like before the first payment. So, you’ll have flexibility over the payment period and can adjust this in accordance with lockdown lifting. Covid-19 may be the catalyst for firms to permanently make the move to monthly billing, and the stats show that their clients will thank them for it. A silver lining to the Covid Cloud might be the opportunity to organically introduce your clients to monthly value-based billing, supporting their cashflow as much as your own for the foreseeable future.
Covid-19 has also seen a gain in popularity for different billing types. The Government’s Coronavirus Job Retention Scheme has raised questions for accountants over how to charge for the work when results aren’t guaranteed, or whether to charge at all. For those who are offering clients additional furloughing services, it may be that you are including this in your usual fee or, alternatively, you may be charging a ‘no win no fee’ approach. In this case, Practice Ignition allows you to propose an estimated amount to the client, which can then be revised, confirmed and collected once the Job Retention funds have been granted.
However you are structuring your billing over the next few months, it is essential that there is complete clarity on the billing schedule between you and your client. In order to be able to plan both parties’ cashflow, formal agreements and payment commitments need to be implemented. Practice Ignition allows you to create or edit these within 5 minutes and issue them to the client digitally. You’ll be able to plan your own cashflow while knowing you’ve also supported your client’s.
To learn more about Practice Ignition, head to www.practiceignition.com
About the author
As EMEA Partnerships Manager, Alice has introduced thousands of partners to Practice Ignition. She works with Accounting Bodies, Tech Firms and Consultants to spread the word across Europe, the Middle East and Africa. Passionate about automation, Alice aims to take the fear out of technology and shows firms how easy automating the perfect onboarding process can be.
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