Straight up, why are you acting like a bank? Last week we discussed the need to start being Pro-active rather than Re-active and this question which is also this week's topic, is very closely aligned. Now again, this step is pitched predominantly at Accountants however, being a business owner in any field, this topic should be at the forefront of your thoughts.
4. WHY ARE YOU ACTING LIKE A BANK?
For an industry that spends their time discussing cash flow and debtor management with clients and fixing your client’s financial issues, you don't seem to practice what you preach.
Accountants seem to offer every type of payment plan or scheme possible, for example, your clients can pay you in any of the following ways:
…..only except in many rare cases, an upfront payment or a guaranteed payment arrangement might be in place.
Accountants hesitate to demand or even offer upfront payment, yet advise all your clients that this is the only way to increase or fix their cash flow problem. By grandfathering your oldest clients through tough times or because you are scared to lose a client, generally means you are technically slaves to your clients, they are determining your payment terms and conditions, instead of the other way around.
Essentially accountants are acting as a loan house to clients until they are ready to pay you. You’re basically acting as a bank to your clients, and you’re not banks, you’re accountants, so why do it?
We encourage you to pick the most efficient way to get paid from your clients. We also encourage you to dramatically decrease the number of different payment plan options for clients, streamlining your processes. Utilising a service such as Practice Ignition, that generates the engagement letter and service offering/quote to your clients, that also has payments enabled, to allow the client to accept their proposal and provide payment details at the same time, before you’ve started work. This will not only increase your cashflow, but dramatically decrease your debtors.
Alternatively, sending an electronic invoice that has a “click to pay now” option included in the invoice, through one of the many payment gateway providers such as eWay or Stripe, again, makes it much easier for your clients to pay you.
This transition for your clients won’t happen instantly, however it can happen much quicker than you expect by communicating your intention to change with your clients, and dramatically decrease your debtors.
Now, for any other industry business owner reading this, think of every way you currently allow your clients to pay you, consider your cashflow and debtor position and if you aren’t happy with the outlook, change it.
In the next blog, we’re going to talk about, Debtors....want to know more? Get in touch for a chat!
Clarity Street was conceived from years of engaging with Accounting firms on a daily basis and a constant desire to make Accounting firms & SME’s more efficient and profitable.