Getting paid during the post-virus crunchby
Accountants spent the tough lockdown months offering the lifeline of free advice while clients cancelled payments or faced the harsh reality of closing their business. With cash tight, now is the time firms must have those tricky payment conversations.
As the country went into lockdown accountants were called upon to provide the healthcare for businesses. We stepped up and processed new legislation, applications for CJRS, grants and loans, and advised clients on how best to survive the darkest days most of them had ever seen. We did all this while supporting our staff working remotely or furloughed.
Generosity hits firms’ revenues
Our first thought was to provide our clients with that lifeline and pricing was secondary for many firms. We may have done more work for less money as an act of solidarity and genuinely caring for our clients. But now, for some, that goodwill and generosity has hit their firm’s revenue.
Businesses may have cut back on their accountancy services as they have brought the work in-house or they may have decided to save up all their bookkeeping for the year end thus deferring their fees. And some clients will have shut up shop altogether as their business dwindled and became unviable with lockdown and a recession on the way.
Existing bills may remain unpaid and even those that are paying may take much longer. It is at times like these that our own cashflow becomes more important than ever to ensure our own survival.
How to ensure you get paid
As businesses knuckle down for the post-virus crunch, accountants must have those tricky payment conversations:
- Ensure that all work is invoiced as agreed.
- If you did any work outside of your normal scope without agreeing fees in advance you will need to approach this carefully. A phone call is best as you may need to negotiate and you may also need to be prepared to sacrifice payment or even to lose a client who objects to surprise bills.
- Even if you initially did CJRS claims free of charge you can still review your charging structure for future work as the calculations become more complex over the next few months.
- Monitor your cash balances and future cash flows each day.
- Chase unpaid bills appropriately and promptly
- Look at the best ways to collect payments now and in the future
The conventional ways of accepting payments are:
- Cheques which seem to spend an inordinate amount of time in the post
- Bank transfer instigated by your client at their convenience
- Card payments with the associated charges and delays in reaching your own bank account
- Direct debits where the firm is in control of the amount and dates.
- Sending a smart request through a payment app like Ordo (secure invoice and payment link) via email or text so that payments can be made instantly from the client’s phone using new open banking technology, directly from their bank account immediately to yours.
An easy payment method
With cash tight at our clients too their payments may be delayed and even direct debits may bounce or be cancelled so we need to make it as easy as possible to pay – and to allow part payments and payment extensions, generally as much flexibility as we’re willing and able to give, where businesses really are struggling. Sending a message and payment link together makes it a simple process with no opportunity to forget.
The detailed invoice is linked to the email or text so there is no query over what is being paid and the payment itself is made by your client clicking on the secure link and selecting their own bank. As an added bonus the payment will reach your bank account within seconds. And with the right reference so that reconciling is a doddle.
If you’re one of the firms that have picked up additional clients then you are in a much more fortunate position. And with more businesses being registered with Companies House during lockdown there is hope for the future as most of the businesses will need our help.
Efficient payment processes
We need to make sure that we have simple payment processes in place from the beginning and giving clients a transparent and easy way to pay helps ensure we never fall out over outstanding bills or invoices. Nobody likes chasing overdue bills so start every engagement with:
- Engagement letter that details work to be done and payment terms. A commercial necessity even if you don’t belong to a professional body which insists on it
- Prompt invoicing; in advance if possible
- Simple payment processing in the cheapest, most efficient way practical
Focus on easy and efficient ways to collect payments now and also for new clients coming onboard as new companies open.
Visit Ordo's website for more on taking the headache out of collecting payments and getting paid.
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Della Hudson was part of the class of 2009. She built up Hudson Business Accountants and Advisers from her kitchen table to a small team of flexible workers with independent premises in Nailsea, near Bristol. The firm ran regular Money Matters seminars and other training and webinars. Della sold the firm in 2017 in order to focus on the...