I was listening to a podcast from the USA which was an interview of the founder of a successful small firm in the USA. One of the things this firm does is weekly billing for its virtual CFO service clients. This is the first time I have heard of weekly billing but as I listened to the podcast it was clear it made sense for this firm.
The founder explained that a key element of their virtual CFO service is weekly check in meetings with each client. These are mostly done via video and are sometimes not very long but maintain a forward looking focus for the client business. The founder’s view was that if he was adding value on a weekly basis it made sense to bill weekly. This firm does not require any minimum term and clients can literally work with them on a week to week basis. It’s quite empowering for the clients who can leave at any time if they don’t believe the value is there.
I don’t have any hard data on billing patterns in Australia but based on the sample of firms I have had contact with in the past 12 months I conclude there is a mixture of the following approaches to billing:
- No agreed fee, do and charge
- Agreed fee with a percentage up front and the balance on completion
- Agreed fee paid on completion
- Agreed fee paid monthly over a period of typically 10 or 12 months
Variations of these include “estimates” – either a single amount or range. There are likely others I’ve not mentioned but I think I’ve got the majority covered.
Let me state up front my belief that for most of the work accountants do, it should be relatively easy to agree a fixed fee up front with the client for an agreed scope of work. Yes you will get it wrong occasionally but you will get it right most of the time and that is what matters. In conjunction with this you have a process to capture scope changes and discuss them with a client to agree an additional fee where appropriate. This can be a little harder but it very doable. Take a leaf out of the car servicing playbook. When you leave your car for service you know what service it is and how much you will pay. Then sometimes you get the call to say we found an additional issue would you like us to fix it for an additional charge of $X? I don’t know about you but I generally say yes.
Some people have said to me that monthly billing is an administrative burden they don’t want. If that is how you view it then I suggest you review your systems for billing and make a change to remove that burden, because it absolutely does not need to be that way. It should happen automatically. It shouldn’t matter whether it is weekly or monthly, it just happens. And by that I mean the client gets their tax invoice and their bank account or credit card is charged the appropriate amount and the accounting at your end is all taken care of.
I am aware that many start up accounting firms have adopted fixed fee monthly billing as the standard from day one. For existing firms there is some change management needed and a key part of this is communication with your clients. What I am hearing from my clients who are making the change is that most of their clients really like the idea as it smooths the cashflow and gives certainty.
Not doing any monthly billing of clients now? Weekly sounds way too scary? Meet me part way then and start the shift to monthly billing for some of your clients. The clients I have worked with on making this change have been very happy with it and I reckon you will be too.
If you are interested in the US firm I mentioned you can see their website here: https://www.summitcpa.net/