Pricing, Billing, and Collecting Fees

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Pricing, billing and collecting fees What CPA firms can do to run their businesses more efficiently and effectively. By Edward Mendlowitz, CPA/ABV/PFS/CFF CPA firms provide invaluable advice to business clients but often struggle to run their own businesses effectively, particularly in the areas of pricing, billing and collections. Failure to set appropriate fees, deliver bills in a timely fashion and collect payment promptly—or even in full—cuts into a firm’s profitability, hurting the business and the accountants in it. Remedying this situation requires CPA firms to make a conscious effort to ensure they get paid an appropriate price in a timely fashion. To best do this, CPA firms should secure the fee agreement upfront, when their value to the client is greatest, and make sure they deliver excellent work on, or ahead of, schedule. If the job requires more work than was expected, the CPA should contact the client as soon as possible to discuss the need for extra fees. When the work is done, firms should deliver the product and the bill at the same time. This increase the chances that the client will go ahead and pay the bill, sparing CPA firms the wasted time and anxiety that develop from having to send statements or hound clients to collect what is owed. For the firm’s partners, the goal is to free their minds and time for more productive activities and ensure that their business is providing shareholders with the revenue needed to compensate staff appropriately and plan for the practice’s growth and the partners’ retirement. EFFECTIVE PRICING Pricing is an art, but many CPA firms treat it as a science. Firms often use a time run or fee chart to determine a bill rather than taking the time to understand the value of the services they provide. Exhibit 1 presents a list of pricing techniques. CPA firms need to review each service they provide and price
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