How to move to upfront payments

For accounting and tax professionals looking to build a zero debtor practice, one approach is to make upfront payments a requirement for clients. You’ll eliminate the hassle of managing debtors and it helps to maximise cash flow. Although such a change may seem daunting at first, there are simple and effective ways to make the switch. Here, we'll explore why you should consider upfront payments and share practical tips to get you started.

If you’re an accounting or tax professional trying to scale your practice, there’s always an element of change management. You have to understand where you want to go. For example, if you want to move to a zero debtor practice, you need to stop delaying the invoicing and the payments. “To stop the bleeding, move to upfront payments,” says Jennie Moore, Ignition’s Partnerships Manager.

There are a number of ways accounting and tax firms can get paid upfront for their services. One approach is to implement a recurring billing model, where clients pay a fixed fee at regular intervals for ongoing services. Another option is to use retainers, where clients pay a set amount on a regular basis for a certain amount of time. You can also consider implementing automated billing and payment systems to streamline the process. For example, Ignition allows you to request payment details upfront before a client can sign your proposal.

Making the move is similar to switching your billing model, such as moving from an hourly or per-project basis to a recurring revenue model. You have to have the proper tools in place to articulate your value. “You need to have a really great proposal system and a really great workflow,” says Jennie Moore. “Chances are, many of you have already optimised the systems in your back end. But you haven’t optimised your back office. Moving to upfront payments is frankly just going to a billing system that accommodates for that. And that's what Ignition does.”

Technology and automation tools like Ignition can help you optimise your accounting processes, reduce costs, and improve your practice efficiency. With Ignition, you can:

• Automate your billing and payment collection process.

• Sell confidently with branded online proposals.

• Get automated engagement letters that outline your services, pricing, billing frequency, and engagement terms.

• Save hours on administrative tasks with app integrations.

Ignition makes it simple to engage clients, bill, and get paid for your services – all in one place. You can request an upfront retainer or payment in your proposal and minimise the chance of nonpayment. Ignition then automatically invoices your client when they sign or schedule the payment for a specific date, reducing the risk of accounts receivable.

Ignition also lets you choose from a range of flexible billing options, whether your practice uses recurring or fixed-fee billing, bills by the hour, or both. You can bill your clients by the hour, week, month, quarterly, or even annually when creating proposals. You can also bill on completion or request a deposit, giving you the flexibility to choose the billing frequency that works best for you and your clients.

When you move to getting paid upfront, you need to communicate the change to your clients and give them proper notice. (At least four weeks is customary.) Communication and cadence are key. Jennie Moore discusses the importance of this in Tips for improving cash flow: Diagnosing debtor issues. You want to clearly communicate what's happening.

What’s more, you want to give your clients a hassle-free and convenient way to pay. Make sure, when your proposals go out, that they have direct debit, and credit card payments enabled. “Clients can't sign the engagement unless they put in the payment information,” says Jennie Moore. “And if there's a question as to why that is, then you have a script for your team to come back to and articulate what the new process is for the firm. Again, it’s about communication.”

“We signed up to Ignition for compliance, but we got so much more with all the extra cash flow benefits. In year one, it took us from having £200k worth of AR to being cash flow neutral, while also growing our bank balance from £30k to £250k”, says Michael Chrichard, Director, Chrichard and Co.

And Michael Chrichard is not alone. Marie Greene of Connected Accounting has a similar story to share. “We have zero accounts receivables, literally none,” she says. “I used to have to chase people. Now, we charge our clients the first of the month. It's automatically withdrawn from their bank account or from their credit card account.”
 

In fact, over half of customers (54%) say they've improved cash flow since implementing Ignition.

Building a debtor free practice and switching to upfront payments may seem daunting, but it is possible. Join the growing number of accounting firms that have successfully achieved this goal with the help of Ignition. Watch our demo today.