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Practice Tips - telling the client they're going to pay

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15th Jul 2005
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In the first of this series I explained the need for a policy to make sure clients pay you what you’re worth, and on time. Any such policy will only work if the client knows about it, so a key element in it is communication.

Billing is the most fundamental part of the relationship between an accountant and their client. The reason is simple: the accountant is not a charity and so being paid is the reason why they do their work. For that reason communicating a firm’s billing policy is key to its commercial success.

I also think it is key to winning a client. No one wants to engage an accountant and not know what they’re letting themselves in for. They want to know:

  • how much they will be billed;
  • when they will be billed;
  • when they must pay;
  • how they can complain if things aren’t as they expect.

So being upfront about billing is not a negative part of the marketing process for a firm. It’s a positive attribute if a firm can acknowledge this key issue. Its openness about such a difficult subject will help establish the relationship of trust which is essential with any client.

For that reason I think that any firm should have a written policy on billing and it should be available in the form of a client information leaflet. This should be out there in reception along with all the other useful bits of paper that you hope will induce the client to give you work. More importantly it should also be:

  • given to all prospective clients
  • handed out at new client meetings
  • referred to in the engagement letter as being the policy of the firm, and be sent with it
  • sent with client bills to remind them of what they’ve signed up to.

If it’s that important such a document has to be prepared with care. In my opinion it should explain:

  • how the firm charges. So, if, as is commonplace, a fixed price service is offered for compliance work it’s vital that the firm makes clear what is covered by the fixed price, and what is not. This is essential if disputes are not to arise. It follows on of course that the firm will have to explain how non fixed price services are charged for as well, for exactly the same reasons.
  • that all quotes provided are net of VAT. You might think this instinctive, but private clients will not and having been caught out by this more than once I believe that a leaflet can pay for itself for this reason alone.
  • disbursements, and when they are charged. It’s always been my policy to absorb as many as possible into my fee and not bill for them separately. That however is not always possible, and a clear policy on this helps to overcome any problems.
  • when you will bill. I have a simple policy on this. It says I bill if the work is undertaken over a period of less than one month, upon completion of the work. Alternatively, if the work is undertaken over a period of more than one month then invoices will be raised at monthly intervals for the work undertaken during the course of each month from the inception of the project. Just in case I also allow for billing on such other occasions as shall be agreed between me and the client. I only use this third option when I have to, but it’s useful for small clients where I sometimes say that I’ll only bill when the work has reached a certain value e.g. £200. This is specified in the engagement letter if that is what I have agreed.
  • that payment is due to you within your specified credit period. This has to be unambiguous. So too should be the consequences of non payment. In my view this means an “on hold” policy is required. If product suppliers can do it, so can service suppliers in my opinion.
  • the methods of payment you will accept.

And, finally, this being the twenty first century you have to tell the client how to question the bill. But that, and may of the other issues referred to above are issues I will come back to.
 

Richard Murphy
AccountingWEB contributing editor Richard Murphy is a sole practitioner chartered accountant but was previously senior partner of a firm for 11 years. He has also been chairman, chief executive or finance director of 10 SMEs. A collection of previous articles by Richard on practice management themes is available in Practice Management Zone

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