3 Collection Strategies to Turn Your Pain Into Gain

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I drove past my bank this week and realized (thankfully and with relief) that it had been well over a year since using I’d their drive-through deposit window. Quite a difference from when I started my firm in 2010. There has been an amazing evolution in banking the past few years.

First came scannable checks, then iPhone mobile deposits (which didn’t help much until the daily deposit limit was raised to a decent amount), e-payments, and now ACH, which 80 percent of our clients use. The rest click-to-pay from their emailed QuickBooks Online invoice. For the few remaining bill pay checks that surprise me via mail, I snap a picture on my iPhone, and ta-da – I’ve got money. Gotta love technology!

If you or your firm is considering how to best streamline payments, here are three simple yet effective strategies that have proven successful for my business:

1. Collect up front

I was gutsy enough from the start of my practice to require retainers, so I have far less nightmare stories than some about late payments or billing complaints. Estimating and collecting the price up front provides realistic expectations to the client while covering your risk.

What if you underestimate? Don’t let any client get behind more than your willing to lose. Your leverage diminishes substantially once the work is done, and each month thereafter as you and the client forget the value provided.

2. Collect consistently

Just this year, my firm switched from heavy hourly billing to value-based billing, and I’ll never look back. The superior service and planning strategies we are able to offer Execs by being paid our worth is second to none. The flat fee, earned when paid, is ACH’d automatically on the first of each month, and a five percent discount is offered if they pre-pay for a full year (credit to my business coach, Chuck Bauer, for that idea, as it entices more people than I expected to pre-pay)!

I used to just despise billing, as vital as it is. I would get months behind on hourly billing, and then scramble to catch up when I started to feel the pinch. You are doing a disservice to yourself and your clients this way. Not only will you tend to under bill since neither you nor your staff will recall why you spent twice as much time on something than usual, but your clients are more apt to complain when time lapses along with their memory of your amazing services. It’s also pretty rude to have a client budget a certain amount per month, and then get hit with half a year of work instead.

Make sure you have consistent collection procedures that both clients and your staff understand. It seems trivial or common sense to know how to make a mobile deposit, right? When closing our books last year, I found several high dollar checks that had been marked paid in QBO, but that we (OK, it was me) hurriedly forgot to actually deposit. I keep myself in check now. First I go to the Chase mobile app to complete the deposit, then I go to QBO’s app to accept payment. Problem solved.

On every QBO invoice we send, we include a short URL to an ACH authorization form for straggling clients to convert ASAP, but new clients don’t have the choice. ACH then occurs on the invoice due date, set to the next business day for expedited processing.

3. Collect easily

There are many web apps that integrate with QBO as payment solutions, but only a few that offer ACH. We use billandpay.com, and have been very pleased with the low fees, ease of use, and two-day deposit turnaround (negotiated from a four-day turnaround by paying a few more cents per transaction). Clients can also log in to see open and historical invoicing at any time. They will also receive automated reminders when overdue, too.

When we send an 8879, we make sure the bill goes out at the same time and include a payment link, if needed. This way the client isn’t scrambling to figure out where to go for each step. There is a payments feature integrated into certain tax software, such as Intuit Lacerte. This means that when you send the request for the 8879 to be signed, the payment collection piece through Intuit Payments is a part of the signature process. We clearly state that returns will be filed 24 hours from when their e-signature and payment is received. This expedites client action in a time when the IRS mandates our e-filing turnaround time.

Some respected colleagues strongly advocate credit card payments instead of ACH’ing bank accounts, so consider the processing fees versus risk in the market you serve. I’ve yet to have a bounced check in Southlake, Texas, solely because it’s a high net wealth area.

Our collection process and client satisfaction levels have greatly improved with these methods, and I hope to see yours do the same.

Jackie Meyer, CPA, CTC, MSA is president and founder of Meyer Tax Consulting LLC, in Southlake, Texas. She is also a member of the Intuit ProConnect Tax Council.

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