According to a Quickbooks survey, mid-sized businesses were owed over $300k in late payments in 2021.
That’s no small chunk of change.
Late payments cause a considerable problem for any business, including accounting firms. When your client runs late on payments, it creates cascading issues. Your staff spends valuable time on collections. Your profit margins shrink. It may even become more challenging to cover employee salaries and overhead costs.
But with some know-how, you can institute changes in your workplace to decrease the lag time for payments. Follow these tips to streamline your billing and payments to ensure your accounting firm’s paid promptly.
1. Outline precise due dates in your contracts
Before you bring any new clients on board, discuss expectations of payment.
Make sure that your terms of payment are outlined in their contract and that this contract is correctly signed. This keeps your accounting firm invoicing clear and concise, and an invoice won’t blindside your clients with a sooner due date than expected.
While talking about payment can be awkward, it’s crucial to establish a mutually beneficial relationship between you and your client. They will be more likely to be satisfied with your services if they know how you operate, and you’ll have a stronger foundation for enforcing payment policies.
2. Streamline your CPA firm billing with accounting firm billing software
If you want to be paid on time, you need to invoice for your work promptly. And if you constantly look at invoices and say, “I’ll deal with that tomorrow,” consider implementing accounting firm billing software that offers time-saving invoices features.
When you use accounting firm software, you can invoice each client based on their needs, as well as your operational practices—after all, any billing and collections workflow should improve the practices you have established but not necessarily require you to reinvent the wheel.
Look for software that offers:
- Manual invoicing: generate and customize individual invoices
- Batch invoicing: create, edit, and send multiple invoices simultaneously
- Recurring invoicing: send out invoices automatically on the same day of each month from templates you can tailor to fit your needs.
Automating invoices can be a huge time saver and payment booster. It’s not just the invoices you can automate, either—automate due date reminders to keep your invoices top of mind for your clients.
Your software should allow you to communicate with your clients in the best way for both of you. Look for an accounting firm practice management platform that offers secure invoice sending methods via email or allows clients to download their invoices through a client portal.
3. Offer online payment processing
If someone has to send in a check or come into your office to pay you, it’s going to slow down the process. But when you offer online payment processing, your clients can pay you securely and in seconds via their smartphone.
In short, there’s no reason for late payments when clients don’t have to go through the hassle of writing the check, buying the stamps, putting the check in the mailbox, or driving to your office.
Plus, you’ll have access to your payments faster. Online payment processing software can fund your payments to your account in as little as 24-48 hours—including ACH payments.
4. Utilize advanced payments
If your client doesn’t like to hassle with invoices, consider implementing advanced payments for them.
You can set up recurring payments in your online payment processing software that automatically invoices the client and takes the money out of their account. With recurring payments, you’ll be paid every month on time. And if the payment doesn’t go through for some reason, you can either discuss alternative payment plans or press the pause button on further work for them until the issue is resolved.
Another option for advanced payments is to offer retainer invoicing. This means the client pays you a retainer fee for the month in advance to complete a certain amount of work.
5. Institute late payment fees
While it’s always better to figure out a solution in advance, sometimes a client just doesn’t pay on time, no matter how easy you make it for them. To protect your revenue against these situations, it’s best to institute a late payment fee policy.
While it can be uncomfortable to deal with delinquent payments, identifying the steps in advance can relieve some of the stress of approaching clients with overdue balances. Start by:
- Ensure your fees are within legal limits for interest rates and that your policy is clear in your invoice terms and contracts
- Make sure that the late invoice went out on time and that the due date is visible
- Follow up with clients with a brief, polite email that reminds them about their due date. Make sure that your email attaches the original invoice, outlines the amount owed, and reminds the client of the late fee terms
- Have a plan to escalate the issue if needed
Timeliness is critical here. If you wait too long, anyone who pays late may assume that you don’t care about your accounting firm’s payment due dates.
Get paid more quickly with Mango Practice Management
Streamline your accounting firm payments with Mango’s accounting firm practice management software. With our robust time and billing features, you can institute manual, batch, recurring, or retainer invoicing with a few clicks. Transfer data from your projects within Mango to create invoices fast. And with Mango payments, clients can make payments in the portal from their smartphone.
Plus, Mango’s accounting practice management software covers every aspect of your accounting practice (except the taxes), so you don’t need to patchwork multiple types of software anymore to get the job done. Since Mango is made by accountants, for accounts, it has an intuitive interface that anyone can use. And if you need any help getting started, Mango offers free, unlimited data migration and training.
So stop haemorrhaging valuable resources and schedule a demo to see how you can get paid more quickly with Mango Practice Management.
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