The Abundant Accountant: Leads, Sales & Business Growth for Accounting, Tax and Bookkeeping Professionals 020 | How To Charge Clients In Advance Before Providing Services
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!
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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.