Content originally appeared on the CPACharge blog.
Running a successful CPA firm requires more than being a knowledgeable and talented CPA—in fact, that’s only about half the battle. You’re not only providing a valuable service to your clients, but running a business as well. Many CPAs struggle to run the business side of their practice effectively, which often leads to money being left on the table.
Thankfully, there is much that can be done to streamline your billing process and remove barriers between your clients and a steady paycheck. Below, we've outlined six practices to improve your firm’s billing and collections processes that can easily boost your overall profitability.
Be Transparent in Your Work
Transparency goes a long way. Your clients like to know exactly what you’re doing for them, and why you are doing it, so they know they’re getting their money’s worth. This is why open communication is absolutely vital.
Make yourself available to answer any questions they have in a friendly manner, and explain your reasoning behind the choices you're making. The more you keep your client informed on your activities, the more you’ll instill confidence and increase their overall satisfaction with your services.
Equally important is setting clear expectations when you first meet with your client. Make sure you’re both on the same page as far as the scope of your work, what you expect to achieve, as well as your rate and the payment window. This will help avoid surprises on their end when they finally receive your invoice—they’ll likely feel like you kept your word and will be more inclined to pay on time.
Keep Accurate Invoices
Poor time-keeping can be a stubborn habit for some CPAs. For instance, some will save their time-keeping until the end of the week, or even the end of the month in some cases. Well-intentioned, they often feel their daily focus and energy would be better spent getting their tasks done.
However, this can often lead to inaccurate records or even completely forgotten tasks. Unless you have a perfect photographic memory, waiting to record your time will likely end up costing you money in the end.
Your best bet is to get into the habit of recording your activities as soon as you complete them each day. Start building your invoices as soon as the work has started, and use a timer to track how much time you’ve spent on each task. Better yet, you can take advantage of many time-keeping software solutions that can streamline this practice and count every minute of billable work.
Keeping accurate invoices will also help with sending them out in a timely manner, as you’ve already done the legwork of itemizing your work for the month. If you’re able to send your bill at the same time each month, your client can anticipate their arrival and plan to pay them accordingly.
Deliver Work on Time
This may go without saying for some CPAs, but it bears repeating regardless. If you have set a deadline to give your client some work, stick to it as much as humanly possible (and report delays as soon as you anticipate them).
By not delivering on your promise, you’ll give your client the impression that they simply aren’t that important to you. In turn, they may feel that paying you is simply not that important to them, or may feel that the cost of your bill is unjustified.
Encourage Timely Payments
One way to ensure bills are paid on-time and frequently is to implement a late fee if a client doesn’t pay within a specific time window. For example, you may consider a service charge between 1 or 2 percent per month if your bill is not paid within 30 days of receipt. You might even increase the rate for every month your client is late.
Of course, you must make it crystal clear to your clients that you will charge a late fee if payments are missed. Your late fee rate should be included in your engagement letter, or any onboarding paperwork.
You may also consider including a billing policy on your firm’s website, so that current and potential clients can always view this information.
Be Professional When Addressing Late Payments
It’s completely normal to feel a little bit of frustration when clients aren’t prompt with their payments (maybe more than a little). However, the last thing you want to do is become pushy or aggressive when sending your payment reminders. This can put your clients on the defensive, which can reduce the chance of seeing a payment from them altogether.
Try to set up payment reminders that come off more naturally than demanding. For instance, if you’ve implemented a late fee, consider sending a reminder of when the bill will be considered overdue. This way, your email sounds more like you're trying to make sure they save money by avoiding the late fee, rather than asking why they haven’t paid yet.
Keep in mind that most clients do not want to be delinquent with their payments. It could be a simple matter of an overlooked email or invoice, or waiting for the proper amount of funds to arrive in their accounts. Unless this client has been a problem in the past, assuming the best of intentions and interacting with your clients in a friendly, professional manner is your best course of action when it comes to billing.
Make Payments Convenient
If you’re looking to increase your monthly take-home, you could make your whole billing and collections process as much as 39 percent faster by switching to an online payment solution.
Rather than waiting for a check to arrive in the mail, and then depositing it into your account, accepting a payment online can get the processing rolling right away. With faster processing, you could increase your cash flow month-over-month significantly.
Your clients will also appreciate the convenience of paying you online with their cards or eChecks. In fact, a recent study by TSYS showed that 69 percent of consumers prefer to pay their bills online.
Plus, online payment solutions are often equipped with features like emailable payment links that allows recipients to pay anywhere with an internet connection (which is practically anywhere on the globe in today’s world). They can log in, quickly send a payment, and go about their day.
It’s a win-win for both of you.
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