accounting
It’s time for accountancy firms to muscle up to improve collections. Times are getting tougher. Money is tighter. Business slower. Legal costs are rising. Clients that used to pay on time are now paying later than normal. Out of trading terms. And those that used to pay late are now almost at a standstill. More work needed to chase up payment. Sound familiar?
So. What are the options?
* Sit it out – keep on doing the same ole’, same ole’ – hoping that things’ll turn out ok, or
* Take steps to make sure that your firm suffers as little as possible.
I’m opting for #2 and when I visit several of our accounting firm clients over the next few weeks I’m going to suggest that now’s the time to make a few changes. It really is time for old paradigms to change, for accounting firms to become much more commercial. Many of the following points, you already know should be being done, but, simply put, in most firms, they are not. Anyway, here are the points I’m going to discuss.
1: Check out new clients before taking on large engagements.
Why undertake a big job utilising the firms resources and the associated personnel costs if the new client has a suspicious history. For Australian firms, consider becoming a subscriber to Veda Advantage (AU$195 to join, AU$42 monthly subscription) Also useful when collecting payments.
2: Get all instructions in writing
This will NOT always be possible but, from an accounts receivable point of view, and whenever in doubt, absolutely vital. I have personally seen many hundreds of thousands of dollars NOT collected due to lack of proper documentation.
3: Get paid “up front” for long engagements
There are several companies that offer professional fee funding. 100% of a fee raised is paid to the accounting firm and the client “pays it off” over an agreed period. A “win-win” for both. The one we have suggested to Australian clients is FeeLink. There is no cost to the practice whatsoever. There is an interest charged to the client, but why should firms “carry” large debts on the ‘never never’ and provide an interest-free banking facility for their clients? Why take on new work for a possibly already financially strapped client without being confident of payment?
4: Get all arrangements in writing
When a client has a large unpaid debt and wants to “pay it off”, it should be policy to get that arrangement in writing (consider using FeeLink here as well). This post from our blog explains why.
5: Send a circular to all clients
Advise clients of two changes to policy
a: that “Due to (put in some reasons here – rising costs… GFC… over the last nine months many clients have been taking longer to settle their accounts than in the past…) the firm is obliged to start charging interest on any fees that are not paid within our normal credit facility unless there is an approved payment arrangement in place. (see point 4 above)
b: that a discount of 2.5% will be applied to payment of all fees that are received in the firm before the due date.
Always has been, always will be about good communication between firms and their clients. And vice versa. Establishing the intent of the client. It’s NOT too “heavy”. It’s commercially realistic. Sadly, many firms will continue to provide that interest-free banking facility. But, those that don’t, will not just survive, they’ll thrive.
Note from the author.
Have you ever wondered why a client does business with you and then ignores your invoice like they had no intention of paying it in the first place or they treat you like their own personal line of credit, leaving YOU dangling, waiting months for their payment? Unfortunately this situation is all too common and can even be puzzling for the most experienced business owner. If you’ve ever had to handle outstanding accounts or you are just so over non-payers, then our blog, “Chasing Slow Payers” – http://chasing-slow-payers.blogspot.com – is for you.
Real-world skills, solutions, tips & strategies to get more accounts paid on time, and, most importantly, how to maintain customer goodwill while keeping YOUR cash flow in the positive.
There is a great need for qualified professionals that can decipher the numbers of businesses today, more than ever before. In fact, millions of people are finding out the hard way that the average software is not going to save them from the tax man when it comes time to pay. However, for those that are fed up with trying to balance both business and books, there is hope. For those that are in need of an accountant in and beyond professionalism is easily found. Before jumping headfirst and hiring anyone, make sure that you keep the following ideals in mind. This is especially true if you’re a small business owner and are not sure what to look for or even where to look. Consider these 5 rules of thumb when looking for an accountant.
5 Rules of Thumb To Selecting The Right Accountant
1. Credentials – Look for the credentials of anyone that is calling themselves a professional. If you’re looking at an individual business, you will need to make sure that they are qualified to work on your books and won’t get flustered or frustrated when they see what they have to do. Professionals should be ready to show you their credentials and talk about their experience and anyone that is too shy to mention them, is not the right candidate.
2. Experience – Look at their tract record, and ask for experience. Yes, there are some great options to choose from when someone gets out of college, but if that’s not what you want, look for a good amount of experience. Without this, you’ll end up hiring someone that is prone to making rookie mistakes and can end up costing you extra money in the long run. Do not be afraid to say no to someone that you deem too inexperienced to handle your financial data. Remember, you’re in control over this process, so do not feel bad.
3. Licenses – Each city, each state, and county has different rules as it pertains to financial law. If you’re looking for an accountant, for instance, make sure that they are licensed to practice in your area. Remember, they have to be familiar with not only numbers and practices; they have to be familiar with the very specific laws that are in the county and location that you’re in. If they aren’t familiar with the local laws, the likelihood of them making a mistake exponentially rises. Don’t be swindled, make sure you ask to see the license number or even the license itself. You have to remember that you’re dealing with your livelihood and trusting someone outside of your business to help, so do not hesitate to ask questions.
4. Availability – If you’re looking for a professional that is available at all hours of the night, you’ll be hard pressed to procure services. However, if you’re flexible you will find that there are a lot of different accountants that will meet you at your leisure. Consider the availability of whomever you plan on hiring, just in case there is a financial emergency and you need them to see it through. If you’re absolutely dead set on finding someone that is 24 hours, available, good luck. Most professionals don’t meet those hours, but if you do find such an accountant, you’ll find a great thing, because money, as they say, never sleeps.
5. Price – If the prospect you’re looking at meets all the above points, consider the price that they charge. Remember, you have a budget to manage and you can’t just pay for the most expensive help you can find. You need to have a budget in mind and negotiate with someone in light of your financial situation. Most often, there is a flat rate that is paid, but in some cases hourly rates can be established and if you communicate well with your potential hire, you’ll be able to strike an interpersonal deal to ensure that you’re continually moving forward. Do not assume that they know your situation, so make sure you illustrate it from day one, so that they are fully aware of the financial stress you might be in at the time.
The above 5 rules of thumb are just the start. There are a lot of other things that require some attention, especially when it comes to dealing with your financial situation. If you own a small business or are simply trying to understand your economic structure a bit more, you need to make sure that you can trust whomever you’re going to hire. If you can’t trust a person with the above 5 things, you most likely won’t find them to be a worthwhile candidate.
Avoid large firms unless you can be reassured that someone will take care of your personal account. Some small business owners have found out the hard way that too large a firm is not the right place for an independent. There are exceptions to the rule, but in general larger locales can seem daunting.
I can remember the day when I used to trudge into town to visit my local high street accountant. After having wasted 30 minutes in the car, I then had to find a place to park (whilst paying a small fortune) and sit and wait at reception whilst my advisor finished off his session with the previous client. AFter having gone through all og this, I then had to sit through, well let’s face it, exactly what I’d seen and heard the previous year!
Well, it’s now time for me to fight back against the world of black suits and professionalism, I now have an alternative online. I remember a few years ago when I first came across cheap accounting online. The internet in those day was a pretty soft target. Any Johnny come lately with a practising certificate could build himself a website and trade online. There was no trading history, no reputation that had been accumulated over a period of years. Instead there was doubt and mystery.
However, things have now changed. The world of cheap accounting has now changed into a very competitive environment, which if done properly can result in small fortunes for the owners. The onliners now have to be every bit as professional as their counterparts on the high street. They require considerable funds to invest each year in search engine optimisation and internet marketing. They face humiliation via forums and hateful blogs of they make the slightest mistake. It used to be the case that if you made a mistake, all the local town with a population of 80,000 knew about your failure. Now the stakes are that much higher. If things go wrong online, the whole of the UK with a population of 80 million will know about it!
It used to be the case that the onliners had no track record, again things have changed. Websites display trophies and certificates showing a track record of achievement spanning the last decade. Coupled with the fact that these guys have a turnover that would put the local high street accountant to shame, I would argue that the web traders have every bit as much credibility as the local guy and at a lower price to boot.
It is with this in mind that I decided to take the lower price online and haven’t looked back since. If I have a query, I simply take advantage of the unlimited support offered via email – it’s every bit as good a service that would have been provided via traditional methods.
Take any company – in any sector – and it is quite likely that important departments function independent of timely input from each other, though closely interrelated functionally. To streamline work processes and improve productivity, the Finance and Sales departments should be coordinated. If each has well-established processes in place and sticks to these, the required alignment and achievement of common goals will not happen. This drift is accelerated when these departments use standalone solutions for CRM and accounting. To get these disconnected systems into sync is a time-consuming task and the organization itself may be willing to let the drift continue rather than making a one-time effort towards alignment. In a professional services organization, the services team gets caught in the crossfire. Sales department sets over-optimistic targets and Finance strictly monitors and controls each dollar earned and spent.
Customers are also affected by the divide. The finance department may not know the status of a sale or outcome of a customer meeting and may chase debts/issue invoices inappropriately. The service department may not be aware of issues raised by customers to other departments. Customers reporting issues may not receive good service if the departments are uncoordinated. In such situations, the company is damaging its customer relationships, operating inefficiently, impacting cash flow and jeopardizing future bookings.
One Solution for All
The solution to this issue is ensuring that all the departments in the organization work together towards a common goal. The customer’s needs, issues and most importantly cash flow cannot take a backseat because of a lack of internal coordination.
All the affected departments must work together towards resolving this problem. They must ensure that all the major processes are aligned and that personnel are aware of the overall scheme of things. Organizations can get the much-needed sync by switching to a common cloud platform for the sales, services and finance departments. By working from connected CRM that shares the same data as the financial application and professional services automation tool, errors and discrepancies that inevitably occur when separate systems are used can be eliminated. Manual efforts are dramatically minimized, hence reducing the work of the sales team and the risk of making mistakes. A common platform is also ideal for monitoring whether a customer is credit worthy. The sales team can consult the credit background before selecting prospects or deciding what discounts or deals to agree with customers. They can view the status of the credits and also help with collections. In this way, all the three departments, sales, services and finance, complement each other.
Collaborative Tools
Organizations can also benefit from the collaborative tools available with cloud platforms like Force.com from Salesforce.com. Built in business collaboration tools like Chatter provide a stream of business alerts and conversation, which dramatically helps to improve intra-organizational communication. This real-time collaboration is very important for all the departments of the organization to have visibility about every aspect of the business relevant to them in real-time.