While it’s hard to believe, accountants struggle to get paid promptly. You can reduce uncollectible reduce write-offs, get paid quickly and improve cash flow with these tips.
Most accounting firms are downright terrible at implementing a payment processing system to get paid quickly and minimize their uncollectible write offs. Even worse, they dread calling slow paying clients for fear that it will end the engagement, which perpetuates the problem.
If this describes your practice, then here is a process for reducing your write offs by 99% and dramatically improving your cash flow.
- Invoice clients electronically.If you are still mailing out physical invoices to your customers, you are delaying the payment process. Instead, you need to email out invoices and encourage electronic payment processing to speed up payments. Did you know that sending your invoices by using something like this invoicing software, can also help you to save time, improve cash flow, minimize any errors that could arise with your finances, and can increase your organization? Which is something that manual invoices may not provide. In fact, many customers prefer to pay electronically.
- Send out invoices right away.Rather than wait until the end of the month, invoice clients immediately upon completing their work. While this tip seems blatantly obvious, most accountants kick the can down the road and bill at the end of the month. Billing at the end of the month for work completed the first couple of weeks within a month makes no sense. Instead, operate like most businesses and present a bill when the work is completed.
- Integrated electronic payment system. Rather than wait for bills to arrive in the mail, savvy accountants are using an online payment system which accepts electronic payments by eCheck (ACH), credit cards and debit cards.
- Distribute hyperlinks everywhere.To make it easier for your clients to pay you electronically at all times, provide a secure hyperlink so you can integrate electronic payment processing into your website, embed hyperlinks into your invoices and even in your email signature thus eliminating the check is in the mail routine.
- Accept mobile payments. You electronic payment processing system needs to be mobile friendly these days. And, you should consider accepting mobile payments on your cell phone. It’s so easy today to become “mobile friendly.”
- Integrate online payment processing into your new client process. Going forward, all new business clients for your accounting practice should sign a client engagement letter and authorization to debit their account (e.g., ACH or credit card) for payment. Whether the client’s bill changes each month or is the same fixed fee, you need authorization to capture payment. This provides you with the ability to controlgetting paid immediately after your work is completed. The reality is that the general public trusts accountants so asking them to sign a document stating that they authorize you to pay yourself is no big deal to most small businesses.
- Existing clients that fall behind.If one of your existing business clients falls 60 days behind, then it’s time to contact them directly, provide a reasonable installment payment and have them sign your authorization to debit their account to prevent this from happening in the future. If they don’t have the cash, then credit card payment is the fallback alternative.
- Coax clients to pay by ACH (eCheck) over credit cards. As the trusted advisor for your clients, you should advocate that clients pay by ACH.
This 8 Step Program will reduce your uncollectible write offs by 99%. The biggest challenge is your own aversion to change. That’s right, your own fear is the biggest obstacle.
Hugh Duffy has more than twenty years of marketing experience working in the consumer packaged goods, internet media, publishing and professional services industries. Prior to joining Build Your Firm, he was the Vice President of Internet Marketing for Business & Legal Reports (BLR), a publisher of state/federal laws for employers.