Originally posted on 30 Dec 2013
One of the toughest lessons for preparers [accountants/tax-return compilers] to learn is how to collect what clients owe.
Despite all the years of experience and devising of formulas, getting clients to pay remains as much art as science.
In an interesting article from across the pond, several US firms set out their policies for dealing with slow or awkward payers.
You can read the article here.
I’d like to add to the list by suggesting that if you agree fees at the outset of an assignment, bill early (as soon as you’ve done the work) and chase early, and identify extra work as it happens rather than months later, you’ll increase your cash flow and fee income dramatically. See Bizezia’s calculator which shows how much money you could be throwing away by not doing these simple things.
How many times are you asked to perform additional work by a client but then forget to charge or don’t bother charging as it was “only a couple of hours’ work”? You could be shocked at the amount of money you’re losing – the hours can add up to days of lost revenue. You can access the free Bizezia Extra Fee Income Calculator here. The Contract Engine pricing has changed since the calculator was first published but the principles of the exercise are valid and shocking for both accountants and lawyers.
Firms entering insolvency rockets 41% in a year
In a separate article in Accountancy Age, we learned that the number of accountancy firms entering insolvency processes has increased 41% in a year, according to research from a specialist lending business: Syscap. They found that 103 accountancy firms became insolvent in the last year, up from 73 the year before.
High street firms have been hit hard this year, with a crackdown on tax planning and micro entity auditing.
Following revelations that large corporates, such as Starbucks, Amazon and Google, had used tax planning strategies to cut their corporation tax payments, firms found they were unable to put them forward for their clients, over fears of public backlash and a crackdown by HMRC.
Audit also changed for micro-entities, previously businesses with less than £6.5m turnover and a minimum balance sheet of £3.26m could opt out of having an audit. However, now companies are exempt if they meet two out of three qualifying criteria – a balance sheet of less than £3.26m, turnover below £6.5m and fewer than 50 staff.
Syscap CEO Philip White is reported as saying: “Like law firms, larger accountancy firms have also suffered from the collapse in M&A and corporate finance work. Accountants have been hit as a result of government policy – most notably the exemption of an ever increasing number of businesses from the need to get an audit done. It’s understandable that companies and individuals want to find ways to cut costs by skimping on professional fees but in the end it can be a false economy. Mistakes in cash flow forecasts or in tax returns can cost dear and a lack of a full audit can mean that errors and irregularities aren’t picked up.”
Syscap has launched a specialist funding partnership with the ICAEW to help the institute’s members.
For more information, view the full news story (dated 23 December) on Bizezia News for accountants at: http://bizezia.com/newsindex/index/12-2013-18