Why is it that a firm will engage a client, start working on the project, wait for the client to send in missing information, finally finish the project 60 days later then at the end of the month send an invoice and be paid 30-60 days after that? A 120+ day process!!

It just doesn’t make sense. You have to pay the labour, the insurances, the rent and everything else in that time yet due to your management processes your client treats you like an interest free bank!

Remember this… “Thee who makes the rules – wins the game”

Why do you operate under this model? Just because you always have is not a good enough reason.

If you ask for some money upfront (and make new rules) many of your clients will pay. If you ask for 100% upfront before starting many of your clients will pay. If you give your clients some choices (and not the pay in arrears choice) many of your clients will pay.

Your monthly receivables balance should be less than 6% of annual fees – or 20 days of annual revenue.

Stop being an interest free bank. Today!

I have written an extensive report on Accounting firm performance. You can download the full report here.

Enjoy video # 7.

Work in Progress (WIP) is your inventory. Like any good cash management program you would advise your clients to ‘turn their inventory over’ more frequently to improve cashflow.

There is no difference with an Accounting firm. Your inventory should be invoiced every single month. If you are pricing up front (and I hope you are) then why not ask for some payment up front as well. That’ll help your WIP balance!

If you have done the work then send a bill. If the client is being difficult or the project is taking a long time then send an interim bill.

Your WIP balance at the end of each month should be less than 3% of your annual revenue – or 10 days of revenue.

I have written an extensive report on Accounting firm performance. You can download the full report here.

Enjoy video # 6.