A CPA a few years into owning his own firm called me to talk about pricing. He described his pricing practices including his Terms and Conditions.
“We charge 50% up front, and 50% upon completion.”
“Why is that?” I asked.
He seemed stumped, then muttered something about clients “don’t want to pay in advance before they get what they want.”
What followed was a deep conversation about trust. These T&Cs scream “no trust.”
But not the lack of trust you might think.
I see T&C that delay the final payment until completion not as clients lacking trust in your firm, but in you lacking trust that your firm will deliver on its promises.
Huh?
The small or solo professional firm often is light on systems or processes and doesn’t have any consistent way to ensure that work gets done in an orderly and timely manner.
I understand this situation, being a solo practitioner myself.
The best thing I ever did for my company was to create three simple systems that ensure I track my work and deliver on the timetable I promise to my clients.
These practices have built my trust in myself…
Which in turn builds trust in me by my clients and prospects.
How does this affect T&Cs?
When we have moved through our conversations and a client gets their business growth strategic plan, they see my T&C. For a 3 month engagement, payment in full is required at time of purchase. For a longer engagement, I will offer to automate one third of the fee on the 1st of the month for 3 months. In other words, the fee is paid in full before our work is completed.
This works without fail because I trust myself. The client feels that and sees my commitment to their project and has no doubts.
If your company can’t accurately predict the schedule of client work, you need to fix that now.
Fix it now
A lot of CPA firms are getting ready for the upcoming tax return season (Yes, it will be here before you know it).
Take the time in October and November to adopt simple systems for tracking your work. I don’t think you need big “tech stacks” or lots of costly platforms that you won’t have time to learn. Create a system that works for your company’s rhythm and cadence.
For example, use the date the client signs as the start date.
From there, what schedule do you need to institute to ensure that you get all their documents? Since you can’t control the client’s behavior, your system needs a very robust process for requests and follow up. How can you automate this for frequent and urgent reminders? (You can be polite and also insistent.) You can set a deadline and once that’s passed, the client will have to file an extension.
Your system needs to help you and your associates move through the work.
Do you do all the easy ones first, or all the complicated ones first? Or all the returns for one industry or other commonality? These decisions are up to you, but they don’t make themselves.
Decide, write it down, and follow it!
When you are confident that your system is designed to ensure you meet your promises, you will then write T&Cs requiring payment in full in advance.
Now think about your fees
Only then will you be ready to decide on the actual fees you’ll charge. That’s a topic we can discuss this fall before the onslaught begins. Email or schedule a meeting if you’d like to have that conversation.
