I appreciate that historically this may have been a key factor but, as time and technology rapidly moves, this mindset also needs to. We’re in an industry now of cloud tech designed to make life easier. Does anyone use Spotify? Netflix? Bought a ticket online and received it immediately, digitally?
With this shift in tech comes tools to automate invoicing and payment collection and, as a result, it opens up a huge vista of new possibilities as to what the key traits of a good client are. The key then is removing the “paying on time” factor and that’s not entirely possible. Which is where my fun, controversial statement comes in. Not getting paid isn’t a problem with your clients, it’s a problem with your processes.
Here are 5 statements. Please let me know if you disagree with any of them:
There’s software available for accountants and bookkeepers to create engagement letters with digital signatures, clearly stating the scope & pricing of their engagements
In the previous world of clunky desktop software and clients who only talk to their accountants once a year, getting an engagement letter signed wasn’t exactly a smooth process. It meant first opening a template, editing it, printing it, signing it, and then either scanning it back in before sending it to the client to do the same or having to deliver it to the client to sign. This is not a quick process, or an easy process, or one that fills anyone with delight.
Counter to this, you can now easily, quickly create digital engagement letters which look great, clearly outline scope and pricing with pre-set service lists, and which clients can digitally sign on their computer, tablet or phone. Even right there in the meeting.
There’s software available for accountants and bookkeepers to automate their invoicing and payment collection
Again, the old world will be getting paid by manually creating invoices, sending them to clients, waiting (and hoping) on the client to pay and then chasing them when the payments are (over)due.
There’s software out there to automate all of this too. This is particularly so as more of the industry moves to monthly or weekly recurring fees, but you can automate billing at your hourly rate too.
If you’re looking for help identifying these tools and finding the most suitable for you from within the vast number of tools out there, I’ve got a blog post on my LinkedIn about how to do so.
There’s no good reason for clients to not agree to move to a billing model like this
Clients are already used to automated/digital billing (eg Spotify, Netflix, utilities) for other services.
When I say “good reason” – the kind of reasons clients will typically try and use either indicate an inability or unwillingness to reliably pay, or a lack of confidence in tech that will likely stop them using other tools that’d boost your efficiency.
There’s no good reason for an accountant or bookkeeper to work with a client who won’t agree to be billed automatically
I’ve never worked with a halfway-decent accountant or bookkeeper who struggled to find new clients, apart from those that are just getting started. Most of those who excel find their new clients via referrals, and turn away a large proportion of prospective clients due to capacity or lack of suitability. If you are just starting out, you definitely need to ensure you’re getting paid by your first clients.
Accountants and bookkeepers shouldn’t start work until a client has signed an engagement letter
Hopefully, this one is self-evident. Otherwise, you’re not guaranteeing the client will sign and then you’ve just wasted a whole chunk of time on unpaid work. It also sets a dangerous expectation that you’ll work around your client’s laziness; it devalues what you do.
What all this points to is that if your processes are set up according to best practices, you’ll have all clients signing engagement letters before any work commences, and automate your billing as a part of that onboarding process. Removing any manual invoicing, debtor chasing or debtor days.
So, we can see that if you aren’t getting paid reliably and on time the problem isn’t your clients – it’s your processes.
That’s a good thing too by the way. Processes are a lot easier to change than clients! And if a good client isn’t defined as one who pays on time, that enables us to redefine what makes a good client.