Tips and Strategies for Asking Your Clients for Payment

When I first started my bookkeeping & consulting business, I discovered that bookkeepers and accountants are often expected to start work, and even complete work, before getting paid. Accountants seem to have some of the worst Accounts Receivable collection rates.

People expect to have to pay lawyers before they do any work. They also generally expect to have to put a good size deposit down when hiring a contractor. We put deposits down with the phone company, utilities and pay for our retail purchases before we are able to use them.

Asking for payment, even on delivery of work, is difficult. Our clients just don’t seem to feel that it is necessary. They want their work done and handed over, and will leave saying “send me a bill,” and if you give them the bill, they say, “I’ll send you a cheque.” Then, they seem to forget that bill exists.

As a bookkeeper, you could spend hours, days and even weeks getting your client’s work done, filing their GST and payroll remittances and getting the government off their backs, and still not receive timely payment for your services.

Since there is no way to recover the time you have spent, you have no choice but to wait until the client decides to pay you. You can hold on turning over of the work until you are paid, but that still typically doesn’t get you paid in a reasonable amount of time. I have held onto client’s work for over 2 years.

How many times has a client asked you to go ahead and electronically file their GST or taxes, and then not bothered to pick up the work because they have already gotten the result they ultimately required? They really don’t care to have the work back once things are filed. Heck, you can also do them a favor and store their documents for free.

People treat you how you let them. As bookkeepers and accountants, we need to understand the value of our services and expertise. Yes, the job we do is a “necessary evil,” but it is also highly beneficial to our clients. They benefit from a job well done with timely, important information about their business, and appreciate that they can use our work as a tool to help them make discussions on the future of their business. We take the stress off them in regards to the meeting of their government requirements and the proper paying of their employees. They depend on us for advice and guidance in so many areas.

We are business people, no different than they are. We have operating expenses, filing requirements, employees to pay and a living to make. Retailers don’t hand over a sweater and say, “Sure, just send me a cheque when you can.” We don’t’ have charge accounts at restaurants that we clear up months after we enjoy that wonderful meal. The car dealer doesn’t hand over the keys to our new car without payment by yourself or your finance company. Many businesses can retain the product that was not paid for and recover part of their costs. Knowledge workers, like ourselves, recover nothing by retaining our client’s work. It is of no benefit to anyone but the client.

When something benefits only the client, then the client needs to understand this and should expect that he needs to “pay for the ride before getting on the roller coaster”.

After my first few consulting jobs, I was frustrated with the length of time it was taking people to pay their bills. I asked another Consultant what she did to get people to pay her in a timely manner. She explained that she put a term on her invoice that states that invoices are due on receipt, but should the client choose to take 14 or more days to pay it, they would be charged a surcharge for this privilege. This helped speed things up in many cases; however, there were still those clients that take the attitude that they are doing you the favor in giving you their business and will pay you on their own terms, pay late and not pay the surcharge anyway.

After many years of juggling a line of credit to keep up with the payroll and the rent, having employees turn over work and filing government forms without payment being secured, I decided that we did not deserve to be treated with such little respect and let the clients know and understand that they need to value our services upfront in order to receive our services.

We started to take deposits at the beginning of a job. We eventually learned to refer to this as a “retainer,” rather than a deposit, as people would expect that a “deposit” would be deducted off their bill and not replenished.

We will request enough of a retainer to cover a good portion of the work that must be done. The faster they want the work done, the higher of a retainer we require. When the value of the retainer is pretty much used by work completed, a bill is produced for the work completed and further work is put on hold until the bill is paid. This way, we are covered by the retainer should the client choose not to send payment of the bill for a period of time.

I no longer had to depend so heavily on my line of credit to finance my clients bookkeeping. Yes, that is what you are doing when you do their work, or pay your employees to do their work, and wait for your client to pay you. I don’t know about you but I went into the bookkeeping and consulting business, not the financing business.

We let new and perspective clients know that they will have to give us a “Retainer” upfront before we will commence any work, and that we will not work beyond it. This is clearly laid out in the engagement documents, and we have all new clients read and sign as well. If someone does not agree or gives us a hard time about paying a retainer, then we simply tell them we will not take on their work. We are not interested in working with someone who does not value us or the service we provide, and we will not devalue ourselves by being bullied into it either. People treat you how you let them.

Often, the customer that gives you the hardest time over paying a retainer is the one you will have the hardest time getting paid from. Why would you want a customer like that?

Trust in the value you provide your customers and trust that you deserve to be paid a fair price and no later than when you perform your service or share your knowledge. It is not your responsibility to do your customers work with nothing more than the hope of getting paid.

I wish I had known that I could request payment up front for my services, versus doing the work and hoping to get paid. I can now not only request it, but also, know that a good customer will be willing to pay it.

Had I had the confidence and insight to collect retainers from my clients right from the start, I would have had many less restless nights and stressful days dealing with cash-flow issues. A phrase I have had to use with a couple clients the last couple of years is that “I cannot let your cash flow problems become my cash flow problems; that would be bad business.” Those client’s were always able to come up with the funds required for me to do their work. People treat you how you let them.