it’s good business and your clients prefer it.
by ed mendlowitz
tax season opportunity guide
tax season is a business and businesses need to be paid. it is harder to justify prices when providing services rather than products. products are usually priced before delivery while many times services are priced after delivery, i.e. performance.
more: 5 ways to build teamwork | creating a cross-selling culture | 5 ways to build teamwork | when time-based pricing works | start marketing now for next season | the clients that got away | 4 reasons not to let staff go after tax season | cross-selling beyond your comfort zone
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many accountants price returns before they are worked on, usually basing the fee on last year, or a rate schedule. sending a bill with the return establishes the relationship that you should be paid promptly for the work done.
it shows that you run a business and also provides a courtesy to the client in that they can immediately evaluate the cost and value of what was done.
but just as importantly:
1. the quicker you bill, the quicker you are paid.
2. the highest value after you complete the work is the first time the client sees the results of your efforts – having the bill helps the client relate the service and benefits to their cost. (note: some people believe the greatest value is when the client decides he needs the service and that’s usually when you are engaged. that might be the best time to set your fee.)
3. provide details of fees for added work. do not present one amount for everything you did. if you provided additional services, list each service with an amount.
if you did five additional things, list all five after the listing for the preparation of the return, which should be shown first. now the client will know what they are being charged for and the relative values. many times the additional charge is assumed by the client to be part of the basic fee, and the listing sets the client in the right direction.
if you always did those services without charging, then they are right and perhaps a one-time upward fee adjustment would be in order, and for those you should call the client to inform them of what you will be doing and how the fee will be adjusted. you need to call the client beforehand when they feel they have some control over the situation. calling afterward can create bad feelings and a loss of the client as well as not getting paid, and you’ve sunk your time and resources into that client
4. recognize that the tax laws have dictated additional work, even if the client’s situation hasn’t changed that much. some examples are:
(1) more complicated reporting of capital transactions and earned income credits,
(2) greater recognition by clients to report household employees,
(3) faster and more frequent changing tax laws,
(4) more continuing education,
(5) tax return preparer registration (it doesn’t cost that much and doesn’t take that long, but it is one of a myriad extra “little things” that erode profits),
(6) higher software costs,
(7) children’s returns in multiple states as the “infant that is done as a courtesy” grows and greater retention requirements.
also, greater scrutiny by irs computers needs more careful preparation to avoid nuisance incorrect notices, not of your doing or fault.
5. if client feels fee is too high, and all explanations fail, tell them that this is how you make your living and if they can’t cover their rightful share of it, they might have to look elsewhere.
6. if they say they cannot pay the bill all at once, suggest they pay it in installments by providing their credit card.
one response to “bill with the tax return, get paid faster”
frank stitely
i don’t understand how firms can not be doing this in 2019? we built getting paid into our workflow. we don’t file until we are paid. it saves thousands of $ in chasing people down after tax season to get paid.