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Before you become engrossed with tax returns, take time to examine your firm’s billing and payments processes to make sure you’re set up for smooth workflows and maximum cash flow this year. Here are five ways you can update, improve, or otherwise prepare your billing and payments processes for the busy season.
1. Audit and update your pricing structure
As more firms face pressure to evolve their business models and add advisory and financial planning services to their offerings, pricing has become more complex. Now is a good time to take a look at your pricing approach and make sure it’s working for you—not against you.
If you charge an hourly rate for certain services, make sure your rate is appropriate for your specialty, experience level, and geographic area, and if you haven’t raised your rate in years, consider doing so this year.
If you’ve added value-based pricing, this is a good time to revisit the way you price your services. Is your pricing structure accurately reflecting your costs? Has it served you well over the past year, or did you find that too many engagements required more working hours than you built into your price?
Examine the way you present pricing to clients, too. “Firms should offer clients options, not a take-it-or-leave-it single price,” wrote Ronald Baker for Journal of Accountancy. This approach can ease clients’ transition from hourly to value-based pricing. Baker recommends a three-tiered, good-better-best, pricing approach to help clients better understand the value of your services and help you gauge clients’ price tolerance for future engagements.
2. Add electronic billing services
With modern billing, payments, and practice management software, there’s no need to spend time and resources printing and mailing paper invoices. Most of these platforms allow you to generate electronic bills and send them quickly and easily by email.
“Online, real-time billing is more efficient than the traditional paper-based, once-a-month billing process, but it is not just about saving time,” wrote Samantha Grovenstein-Deal for the Wolters Kluwer Tax and Accounting blog. “It’s about improving cash flow by billing as soon as the work is completed.”
Perhaps most importantly, your clients want this service. A survey by Fiserv found that 79 percent of consumers have switched to paperless billing, and 66 percent say receiving electronic bills increases their satisfaction with the biller. If you have this capability, let your clients know about it. Many will see it as a great convenience.
3. Create professional-looking invoice templates
You might offer electronic billing services or you might take a hybrid approach, with some clients receiving paper invoices, and others getting e-bills. Either way, take some time to examine your invoice templates and update them, if needed.
If you’re generating bills from your accounting, payments, or practice management software, you probably have the option to customize your billing template for your business. Take advantage of these features and add your logo and practice information, like address and phone number, to your invoices. This makes your bills more professional and makes it easier for clients to contact you if they have questions.
Clearly indicate on your bills how clients can pay you. If you offer online payment options, many of your clients might prefer to use them but may need a reminder that they’re available. You can also use your bills as a marketing touch-point by including your website URL and information on any promotions or new services you’re offering.
4. Operationalize prompt billing
Sending bills out promptly and consistently is crucial to maximizing cash flow, but in the thick of tax season, it’s easy for this task to slip down your to-do list.
Your clients’ satisfaction with your services peaks shortly after completion of work, and this is when they’re most likely to remit payment quickly. The longer you wait and the more time that passes after receiving your services, the less urgency clients feel to pay. To increase the chance of prompt payment, it can help to set your billing time and frequency based on the type of work performed—for instance, billing immediately upon completion of tax returns, and at the same time each month for ongoing services.
“Generally, billing should be issued concurrently with the engagement’s completion,” wrote CPA Deborah Rood for Journal of Accountancy. “For example, invoices for payroll and bookkeeping services should be issued monthly, and those for tax return compliance should be sent with the tax return. For larger projects, such as audits and consulting services, bills should be sent monthly.”
For some clients, especially those who have a history of late payment, it can help to make a phone call and let them know their bill is en route, said Rood. Build processes like these into your daily workflow to maximize cash flow throughout tax season.
5. Offer a variety of fast, easy payment options
In a recent Fiserv survey, 70 percent of people said having multiple ways to pay a bill increases their satisfaction with the biller. Some of your clients might still pay by check, but increasingly, people want to choose from a variety of online options like credit, debit, and ACH, and they like having the ability to pay from their computer or mobile device.
According to AICPA’s 2016 National MAP Survey, 68 percent of accounting firms now accept credit cards. “If your firm isn’t taking credit cards yet, that’s something you should change—and quickly,” wrote Ronald Baker for the Journal of Accountancy.
Getting set up to take online payments is quick, easy, and affordable. Use your website, invoices, and email communications to let clients know all the convenient ways they can pay your bill. By equipping them with the flexible options they want, you’ll increase the likelihood of prompt payment this tax season—and boost client satisfaction while you’re at it.
If you want to learn more about CPACharge, a modern online payment solution designed specifically for CPAs, download our solution brochure.