When it comes to communicating your firm's fees, don't dish out surprises.

It may seem like an obvious tactic for keeping clients happy and paying, but talking about fees while maintaining a client relationship can be delicate, especially in an economic climate that has left many businesses struggling.

"We don't talk thoroughly about fees up front," said Rita Keller, president of Keller Advisors in Beavercreek, Ohio. "We tend to avoid it. CPAs will give clients a [fee] range, and that's the last time they'll talk about them, until they get the bill."

Keller, the former chief operating officer at Brady Ware in Dayton, Ohio, and now a management consultant who works with firms on this and other issues, said that the goal is to not surprise your client later when it comes to fees just to avoid an initial awkward conversation.

Instead, she recommended, at the very least, having a discussion up front about the work being done and how your firm's billing and collections process works.

"Many CPAs will send that bill and it is a surprise because the client wasn't expecting it," she explained. "There was additional work, and although they spell it out on the invoice, they don't have the conversation."

While many firms will add collection language into their engagement letters, Keller recommended a tactic for new clients that she used in her own firm - enclose a collections policy statement along with a point person's direct phone and a welcome letter. This is important because legally, a firm can't call a client for collections unless that client is made aware of that firm's collections policy.

"The biggest mistake is not having an agreement that lets the person know how you want to be paid," said Michelle Dunn, president of American Credit and Collections Association in Plymouth, N.H., and author of 12 books on the subject of collections. "Being specific is very important."

WHAT, ANOTHER POLICY?

Nobody wants to inundate a client with calls for an unpaid invoice, and experts say that with a little planning and a communicated collections policy, it can be largely avoided.

Though they can vary, billing and collections policies should include a statement of how often billings will be submitted, what the hourly rates are, when payments are due, and that direct out-of-pocket expenses will be billed, according to Michael Davenport, JD, a professional liability claims specialist with Camico Mutual Insurance Co. It should also include when billings become delinquent, and a stop-work clause stating that if billings are not paid within the number of days specified, the firm may elect to stop all work until the client's account is brought current.

The stop-work clause should include acknowledgement by the client that the firm is not required to continue work in the event of nonpayment on a timely basis. "It should also include an acknowledgement by the client that in the event of a work stoppage or disengagement as a result of nonpayment, the firm shall not be liable to the client for any damages that occur as a result of the firm ceasing to render services," Davenport said.

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