{"id":79009,"date":"2020-08-31t12:00:29","date_gmt":"2020-08-31t16:00:29","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=79009"},"modified":"2024-08-14t09:30:18","modified_gmt":"2024-08-14t13:30:18","slug":"collect-more-by-clearing-up-billing","status":"publish","type":"post","link":"\/\/www.g005e.com\/2020\/08\/31\/collect-more-by-clearing-up-billing\/","title":{"rendered":"collect more by clearing up billing"},"content":{"rendered":"
<\/a>how to handle everything from late payers to extra services to minimum fee schedules. by ed mendlowitz<\/i> question:<\/strong> can you give me some suggestions on overall firm pricing and billing methods?<\/p>\n more: <\/b>envision your future, then plan for it<\/a> | 5 ways to build teamwork<\/a> answer:<\/strong>\u00a0\u00a0here\u2019s how we\u2019ve handled the billing and collection process at my firm. 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\u00a0percent, followed by three equal monthly payments. we\u2019ve found that billing frequently for smaller amounts gets us paid faster with less resistance.<\/p>\n no tax return or financial statement leaves the office without a bill unless it is already paid for or covered by regular retainer billings.<\/p><\/blockquote>\n clients, especially new clients, who\u00a0don\u2019t 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 \u2013 and it works.<\/p>\n for frequent late payers, we hold up completing their work \u2013 and sometimes don\u2019t schedule any of it \u2013 until they pay us. for people who are long past due, we discuss \u201cfreezing\u201d the arrears amounts, and them paying us in full, in advance, for new work. that way we don\u2019t lose the current work they would pay someone else for anyway and \u2013 it\u2019s hoped \u2013 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\u00a0percent\u00a0for current work that will be applied to the past due balance.<\/p>\n getting paid isn\u2019t just a business function; it\u2019s 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.<\/p>\n 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\u2019t recur and price for it. occasionally we list multiple extra items \u2013 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\u2019s estimated taxes, prior years\u2019 income annualizing for estimated tax penalty reduction, alternative minimum tax credit calculation or any of a few dozen other items.<\/p>\n if during an engagement we find a need for something that isn\u2019t covered, we call the client and send a \u201cchange order\u201d or new engagement letter describing the extra work. when you discuss the fee before any work is done and ask for the client\u2019s acceptance, the client feels empowered and in control because they are the one who\u00a0is making the decision to accept or reject the extra work.<\/p>\n 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 \u201cshopping\u201d for accountants. we never discuss the fees with them \u2013 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\u2019ve seen it. it saves time and eliminates many bargain hunters. we also have fee schedules for quickbooks consulting and financial planning services, and we\u2019re developing them for several other services.<\/p>\n over the years we\u2019ve 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 \u2013 once we \u201ccatch on.\u201d<\/p>\n getting paid is near and dear to our hearts. we approach managing it seriously, diligently and professionally \u2013 and think our systems encourage clients to do it pleasantly and quickly.<\/p>\n there have been many books on this topic. i recommend dave cottle\u2019s book, \u201cbill what you\u2019re worth,<\/a>\u201d third edition, and ron baker\u2019s \u201cimplementing value pricing<\/a>.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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\nwe use fixed fees as much as possible for new clients, and our fixed-fee engagement letters state what we will do, what we don\u2019t include and what the payment schedule is. new clients pay us retainers \u2013 as do existing ones if we provide services apart from our regular work for them.<\/p>\n