Jul 15, 2019
Do your clients pay upfront, or
do they pay after you’ve done the work?
Charging your clients in full
before you do any of the work can help your firm be a more
efficient and effective for your business.
When I was talking to one of my
recent accounting students, I was shocked to find out that he had
more than $60,000 in accounts receivable! He found himself spending
so much time chasing down clients for payment, when he could have
been serving them and increasing his value in the services he was
providing.
If you’re charging after you
complete the work for a client, I’d encourage you to consider
changing to require payment in full before any work has even
begun.
It can be a tricky transition,
but you can take baby steps towards dwindling down your receivables
to zero When I worked with my last company, FITzee Foods, I had a
brick and mortar location, and when we were working with the
contractors, I had to pay 50% before the plans would be taken to
the city for approval, and I had to pay the other 50% before the
construction would begin.
Following a 50/50 system can
baby step your clients into paying in full before the work starts,
and you’ll ultimately be able to spend more time serving your
clients and getting them better results vs chasing them down after
sending invoices out!
If you’re tired of chasing
clients down for payment, then this week’s episode of The Abundant
Accountant Podcast is a MUST listen!
Enjoy, and thank you for
listening and tuning into The Abundant Accountant
Podcast!
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paid instead of giving away FREE advice!
- How to stop competing on price
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Here are a few key secrets we
talked about in this episode:
- Michelle introduces herself, and the topic of
today’s episode: requiring payment upfront from
clients.
- Many
accounting firm owners find themselves chasing down clients for
payment, often for work completed as far as nine months previous.
This doesn’t serve accountants, nor does it help them serve their
clients at the highest level!
- I get
asked a lot about how to start charging upfront for services
instead of after the service is done.
- It
may not be the most common practice for a CPA or accountant to
charge up front for services, but there’s no reason why you can’t
incorporate this into your firm right away.
- You
can request payment ahead of time for a long-term project, or with
a brand new client for even just compliance work or services
rendered monthly.
- Michelle shares a story of a student that had
more than $60,000 in accounts receivable. That’s crazy; you don’t
have time for that and this can get down to zero quick.
- If
you think about how much time you spend chasing down payments from
work you have already completed, that is time that you could be
delivering value to your other clients instead.
- Getting payment upfront not only can increase
your revenue, but it can get cash flow going in the positive flow,
and make you appear more professional and trustworthy.
- Think
about courses, similar to a leadership training I just took. I had
to pay in advance before I started any of the training!
- Also,
think about a general contractor: with my old business, I had a
retail store. When we were doing the store build out, I had to pay
50% of the fees upfront before they even took the blueprints to the
city for approvals. I had to pay the other 50% of the fees before
anything was even started for the build out!
- If
you think that your clients will hesitate at paying upfront, you
can start with a 50/50 system: require the first % of the payment
upfront, and then before you deliver the tax returns or the final
tax plan, require the other 50% to be paid in full prior to
delivery of any work.
- Take
baby steps towards charging in full upfront!
- Before I personally work with any clients, they
pay in full, in advance before any work or classes
begin.
- Having clients pay in advance ensures that you
have cash flow and money in the bank. When it comes time to pay
your employees, or the rent, you know where the money is and don’t
have to chase it down.
- For
monthly work, you can bill up front. For example,Bill on the 1st of
the month for the full month of service: that can also help cover
any expenses for you, like software, etc..
- Charging upfront helps eliminate cash flow
problems in your business.
- Remember, this is The Abundant Accountant
Podcast, so if you want to live that life of abundance, you have to
do the work to establish a firm of abundance.
- When
you charge upfront, you do elevate your value, and set yourself
apart from other firms.
- One
of my students runs an efficient firm, and actually has set up ACH
debits for his clients, so they are billed automatically on the 1st
of every month prior to the services being performed.
- Charging upfront builds trust, as you are
making the process smooth and easy, so that you can spend the
maximum time possible with serving your clients.
- Having a money-back guarantee will also help
ease the minds of hesitant clients.
- Making the change to getting paid upfront can
be hard, but framing it as a way to provide even better client
service will help your clients see and embrace the
benefit.
- For a
monthly retainer, I do not personally recommend the 50/50 approach
we talked about earlier. Monthly retainers should be collected 100%
upfront
- This
can be a big shift in your firm, and it will help make it more
efficient!
Learn More & Connect With Me
Here!
P.S. Do You want to MAKE MORE MONEY, WORK FEWER
HOURS?
Join me so you can unlock the
secrets to growing a profitable accounting firm with less stress by
joining our upcoming
Abundant Accountants Masterclass!
You will learn:
- The easiest ways to sift
through clients and get to the RIGHT ones!
- Proven tactics to actually get
paid instead of giving away FREE advice!
- How to stop competing on price
FOREVER!
Join our Abundant Accountants Masterclass today over at
theabundantaccountant.com.