Hello and welcome to the CPACharge blog! Here you’ll find accounting industry insights and educational resources on topics like payment processing, financial technology, CPA firm security, and more. As the experts in payment processing for CPA firms, we aim to make the CPACharge blog your go-to resource for getting paid and staying up to date on industry trends.
If a credit cardholder disputes a charge on their account, they can initiate a chargeback with their card issuer and ask to be refunded. This can occur for several reasons, including if a client or customer believes services weren’t delivered as expected, they don’t recognize a charge on their card, or they didn’t authorize payment.
Any business that accepts credit cards could face a payment dispute at some point. Your success in disputing a client’s chargeback depends on being able to provide documentation supporting your claim within a given time frame. Let’s review three practices you can follow to protect your firm in the event of a chargeback.
1. Get proof of payment authorization
The first item you need to have in a payment dispute is proof that your client actually authorized the payment in question. For in-person payments, proof of authorization can simply be a signed credit card receipt.
For online payments, it’s important to collect an address and CVV code in your web-based payment forms. When this information is submitted at the time of payment, it’s much harder for a client to argue that the charge was fraudulent. Any payment processor should be able to help you make sure these fields are required when clients submit online payments. This enables you to produce a receipt for online payments in the event of a dispute showing that the address and CVV code entered at the time of payment matched those on file for the credit card account.
Another great way to show proof of authorization is with a signed credit card authorization form. This lets you collect and keep client card information and your client’s consent to authorize one-time or recurring payments. You can include the form as part of your new client onboarding paperwork or send it out after a meeting, either for all or just some of your clients. For example, some firms set a policy of getting a signed payment authorization for work that totals $1,000 or more.
2. Get a signed agreement for payment policies
Use your contracts or engagement letters as another place to document and verify payment policies with clients. Break out your return or refund policy on its own or include it as an item in your terms and conditions to explain conditions of client payment. Have clients initial the section to show they’ve read and understood it.
For example, some professional firms include language like the following in their service agreements or contracts:
Promise to Pay Provision
Once services are engaged, the client recognizes that they are contractually bound to the [professional] for their entire fee. All fees paid are nonrefundable and must be paid in full. It is further understood and agreed that if client or any third party paying professional fees for client pays such fees through the use of a debit card, credit card, or other electronic means, such payments cannot be revoked or reversed in any manner by the client.
Client initials: _________
Be sure to customize this language to suit your firm’s needs.
3. Document proof of services rendered
Finally, you need to be able to prove that your services were delivered as promised. This means tracking your time and sending clients detailed invoices that clearly document the work you’ve done for them.
Public records filed, proof of documents mailed, emails, phone logs, and documents drafted on behalf of the cardholder can be helpful in demonstrating that services were delivered as described in your invoice and engagement letter.
With the right documentation—and with a payment processor that provides chargeback support on your behalf—you’ll be well-positioned to prevail in payment disputes, should they arise.
To learn much more about the ins and outs of accepting credit and debit payments in your firm, download our free resource, “The CPA’s Ultimate Guide to Credit Card Processing.”