How to ensure faster payment for work done
This platform helps you take back control of debtor payments and keep balance sheets healthy. Brought to you by FeeSynergy.
As economies reel from the shock of COVID-19, getting a firm’s balance sheet fighting fit can mean the difference between pouncing on an attractive acquisition or suffering a bank loan rejection.
Transforming the books is often a case of addressing outstanding client payments, but many accounting firms across the country are struggling to ensure payments arrive on time.
Some are waiting between 60 and 90 days on average for payment, for work completed well before that, according to Malcolm Ebb, co-founder and managing director of FeeSynergy.
“Thanks to COVID-19, this wait has deteriorated even further over the past five months,” says Ebb. The manual cost of chasing payments and disrupted cash flow weighs heavily on an accountant’s balance sheet, he adds, leaving them unable to act on opportunities or comfortably weather economic upheaval.
“As debts age beyond 90 days, they are harder to collect and may ultimately lead to legal action, debt recovery action, or being written off entirely,” he says.
Better control over cash flow
To give accountants more control over cash flow, FeeSynergy has developed a platform that incorporates advanced workflow, payment gateways, direct debits, engagement letters and fee financing – plus automated email reminders for overdue invoices.
FeeSynergy Collect is integrated into accounting firms’ existing practice management systems to help automate cash collection, establish recurring direct debits and facilitate online payments 24/7.
Money flows from the client directly to the accountant’s bank account without a third party handling the funds, and the focus on payment security adds an extra layer of protection and gives accounting firms breathing space around compliance.
“Once we go-live, we can literally see payments start to flow in,” says Ebb, adding that the platform enables firms to reduce their average debtor wait to under 30 days.
Picture:Malcolm Ebb, FeeSynergy.
“Once we go-live, we can literally see payments start to flow in.”
Ebb points to an example where a four-partner accounting firm had a A$5 million fee base, and A$1.2 million in debtors. After implementing FeeSynergy Collect, the firm found its debtors dropped by 75% within four months, releasing A$900,000 in tied-up capital and enabling the firm to flex its balance-sheet muscle.
“That firm could then fund an acquisition and invest in a new service line,” explains Ebb, adding that firms are in “a much better position to take advantage of new opportunities or weather any storms if they’ve got their balance sheet in good condition.”
Facing the facts
While some clients may enter into direct debit for annual fixed-fee arrangements, Ebb says the vast majority of the industry’s accounting work is billed once completed, with many firms only billing once or twice a month.
“This can lead to long intervals between completing work and sending an invoice,” he explains. “We call this ‘invoice lag’ – in effect, the client is receiving extended credit terms which are often not being tracked.”
According to FeeSynergy, 20-25% of annual revenue is often tied up in debtors at any one time, frequently leaving accountants with insufficient cash to pay their own expenses or forcing them to rely on their own bank overdraft.
“It’s common for clients to ignore invoices and wait until someone follows them up,” says Ebb.
“After nearly 14 years working directly with accountants, we found they needed a systemised way to engage customers from the start right through to payment, and it needed to be a good experience for those customers, such as self-service access to invoices and statements, and a range of payment options so they can pay on time.”
Find out more
Contact FeeSynergy to learn more and get an obligation-free demo and quote. Go to feesynergy.com.au/book-a-demo or email [email protected]