The majority of accounting firms charge their business clients based on time. The way it works is this: The firm has set hourly rates depending on who does the work and this is multiplied by the time taken to do the work, to arrive at the final bill. The 2 biggest problems with this traditional model of billing clients are as follows:
1. Clients find it hard to budget for
If you don’t know how much you are going to be charged in advance, how do you budget for it? You might try and plan ahead and put an amount aside for the eventual bill and then get a rude shock when you find out the actual charges are more than you expected. Also if you don’t know what the final bill is going to be, it makes it very difficult to accurately forecast and plan when you are doing your annual or 6 monthly budgeting.
2. Clients find it a drain on cash flow
It can be a major drain on your business cash flow to be charged your accounting fee in one hit. If your usual business expenses are $15k a month, and your yearly accounting fee is a similar amount, it can be painful for your business expenses to double for a month. You may have to seek temporary financing or ensure that you have adequate savings in place for the large one-off expenditure. This also means that you may have to tie up a large amount of capital that could be put to better use in your business or in your pocket.
In light of the above, is there any hope for an alternative arrangement for business owners or are all accounting firms the same? Thankfully, Prestige Partners has the solution to this problem – fixed fees and monthly billing.
1. Fixed fees give you certainty
By providing an upfront fixed fee, you know exactly what work is to be undertaken and what you are going to be charged. There are no surprises and the dreaded “bill shock” is eliminated. Also you can budget with certainty since you know exactly what your accounting fees will be.
2. Monthly billing improves your business cash flow
Instead of having one large accounting bill to pay, you can spread the payments out over the course of a year. This improves your business cash flow as smaller monthly payments are a lot easier to manage and make than a large lump sum payment. A direct debit can even be set up so that it becomes a “set and forget” expense.
If your current accountant does not provide you with the option of fixed prices or monthly billing, please contact us or call us on 9477 3288 so that we can provide you with a better alternative. We would be happy to help.