how to handle everything from late payers to extra services to minimum fee schedules.
by ed mendlowitz
the 卡塔尔世界杯常规比赛时间 practice doctor
question: can you give me some suggestions on overall firm pricing and billing methods?
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answer: here’s how we’ve handled the billing and collection process at my firm.
we use fixed fees as much as possible for new clients, and our fixed-fee engagement letters state what we will do, what we don’t include and what the payment schedule is. new clients pay us retainers – as do existing ones if we provide services apart from our regular work for them.
we try to time payments to the work flow, so for a job expected to take three months, we ask for a retainer of about 25 percent, followed by three equal monthly payments. we’ve found that billing frequently for smaller amounts gets us paid faster with less resistance.
no tax return or financial statement leaves the office without a bill unless it is already paid for or covered by regular retainer billings.
clients, especially new clients, who don’t pay bills within 15 days get a telephone call from a partner asking them if they received the bill, if there is any problem and telling them that we expect timely payment. that reminder sets a tone to the arrangement – and it works.
for frequent late payers, we hold up completing their work – and sometimes don’t schedule any of it – until they pay us. for people who are long past due, we discuss “freezing” the arrears amounts, and them paying us in full, in advance, for new work. that way we don’t lose the current work they would pay someone else for anyway and – it’s hoped – we collect all of what they owe at some point. we also ask some arrears clients for a series of postdated checks (for any amounts) for as much as a year in advance, so the past due balances can be settled gradually. we also ask for an extra 10 percent for current work that will be applied to the past due balance.
getting paid isn’t just a business function; it’s a marketing issue. how you present bills can make a difference to how the price is accepted, when you get paid and whether you retain the client.
for example, if we perform an extra service when we do a tax return, it goes on the bill as a separate item instead of lumped with the tax preparation fee. this shows the extra work is special and the charge won’t recur and price for it. occasionally we list multiple extra items – such as financial planning, a year-end tax planning meeting, additional services in connection with the sale of rental property, researching cost basis of mutual funds sold, calculation of s corporation basis, preparation of the next year’s estimated taxes, prior years’ income annualizing for estimated tax penalty reduction, alternative minimum tax credit calculation or any of a few dozen other items.
if during an engagement we find a need for something that isn’t covered, we call the client and send a “change order” or new engagement letter describing the extra work. when you discuss the fee before any work is done and ask for the client’s acceptance, the client feels empowered and in control because they are the one who is making the decision to accept or reject the extra work.
having a clear fee arrangement helps us collect more efficiently. we even have minimum fee schedules for individual tax returns that we send to people “shopping” for accountants. we never discuss the fees with them – we tell them we will send (email, fax or mail) a fee schedule and will be glad to discuss it if they want to make an appointment after they’ve seen it. it saves time and eliminates many bargain hunters. we also have fee schedules for quickbooks consulting and financial planning services, and we’re developing them for several other services.
over the years we’ve seen most everything. we have a client who pays us once a year just before the chinese new year, when her traditions say she is supposed to settle her debts. we have a megarich client who pays us in four installments, no matter what the size of the bill, while another client pays his bills only after a third telephone call. these are inconveniences for us, but we are in business and have to accept the peculiarities of some of our clients – once we “catch on.”
getting paid is near and dear to our hearts. we approach managing it seriously, diligently and professionally – and think our systems encourage clients to do it pleasantly and quickly.
there have been many books on this topic. i recommend dave cottle’s book, “bill what you’re worth,” third edition, and ron baker’s “implementing value pricing.”