If you’re one of the many firms who say they aren’t getting paid quickly enough, now is the time to implement strategies that can change that. With tax season behind you and revenue growth likely a key priority for next year, use the off-season to get the ball rolling using these five steps to increase collections, reduce accounts receivable, and help your CPA firm get paid faster.
1) Move toward a pay-up-front or pay-upon-completion model.
The first step to help your CPA firm get paid faster is as simple as it gets: there is no reason to invoice your tax return preparation – the return shouldn’t be filed until it is paid. Remember that you have the ultimate leverage before you file your clients’ returns, but virtually zero leverage after.
2) Develop a stated policy regarding late payments, finance charges, impact on future service, etc.
Now is the time to create this policy, include it in your engagement letters, and adhere to it zealously if you want to help your firm get paid faster. If a payment is late, contact your client immediately. A friendly reminder will often suffice. This action tells your clients that you track and monitor payments closely. If you wait a couple of months before contacting late payers, you’re essentially giving them permission to be late.
3) Make it as easy as possible for your clients to pay you.
From taking credit cards to accepting online payments, there are more ways than ever to make payment easy for your clients – many of which are easier and less expensive than you think. Consider this creative option: If you charge a client a monthly fee or retainer and you process their payroll, consider asking permission to collect your accounting fees when you fund their payroll. For example, let’s say you have a client who pays you a $300 monthly retainer, and you process their payroll on a semi-monthly basis. With their permission, you could collect $150 of your accounting fees each time you fund their payroll. This increases your cash flow, helps your firm get paid faster, and it enables your client to pay your fees in smaller, more frequent payments, which most will find easier. If your client has a service bureau provider doing their payroll, see if they will set you up as a vendor and do this for you.
4) Train your clients on the new payment processes.
Increasing your business doesn’t do any good if you don’t get paid for it. Begin training your clients to make sure that you are on the top of their list of people to be paid. Even better, train your clients that payments are to be made in advance or upon completion of your work. As the adage goes, you won’t get what you don’t ask for—choosing to not ask won’t help your firm get paid faster.
5) Implement technology that helps your firm track profits accurately.
If your firm wastes hours searching for information or duplicating work, it may be time to search for practice management software. With the ability to track your time and billing, you can invoice your faster and more accurately and analyze the profitability of your services over the long term. Instead of dealing with the inefficiencies of manual tracking and billing, you can use technology to boost revenue without increasing the workload of your staff.
By implementing these strategies now, you can shift your firm from reactive billing to proactive payment strategies. With streamlined workflows, simplified client data, and advanced insights, you can boost your firm’s productivity and profitability. So, use this off-season to set your firm up for success—and timely payment—come next year so you can help your CPA firm get paid faster.
Learn more about the Thomson Reuters solutions that can help your firm get paid faster.