Late payment of invoices is a major strain on businesses, directly impacting cash flow and (in the case of accountants) taking up valuable time of highly paid finance professionals needing to chase outstanding debtors.
Additionally, running out of cash is one the most commonly cited reasons for business failure, with it being responsible for a whopping 90% of businesses ceasing to trade. While it’s unlikely that accounting firms will fail due to cash flow, chasing invoices is inefficient and can damage client relationships.
Accountants can minimise the risk of late payments by using Chaser as an end-to-end credit control solution. The platform can be used from conducting credit checks on potential clients through to automated and personalised emails and SMS messages for missed payments, linking clients to an integrated payment portal, and finally, with invoices at risk of not being paid at all being assigned to debt collection.
Why invoices are still commonly used in accounting firms
Despite the tendency for modern accounting firms to switch to a monthly retainer model for an all-inclusive service collected by Direct Debit (see our companion blog post), it is still common for firms to rely on invoicing for one-off jobs, annual or ad-hoc work.
For example, when onboarding new clients, setup work, consisting of clean up work on historic accounts and getting clients up and running on new software, may need to be invoiced.
Additionally, clients with established finance teams may only engage with their accountant for annual accounts and corporation tax, so they are likely to prefer being billed when filings are made.
Many advisory services, including R&D tax credits, access to finance and business plans, are also likely to be invoiced separately due to only being required at most once per year.
How Chaser provides a one-stop credit control solution
Fee collection for these invoiced jobs will need to be managed due to the likelihood of not all clients paying on time and the fees with assignments such as R&D being particularly chunky.
Different interventions may be needed depending on scenarios, such as new client onboarding and the need to escalate cases.
Chaser can provide an accounts receivables solution for a variety of instances across the receivables lifecycle.
Credit checking new clients
Accountants should credit check new clients as part of their due diligence processes. Credit checks on Chaser search potential new client credit history and payment behaviour and highlight any red flags.
It’s important to take negative findings seriously as credit checks can act as the first line of defence against potential late payments and bad debts.
Businesses with adverse findings may be given shortened credit terms (i.e. 7 or 15 days), have stricter credit limits imposed on them, and in extreme scenarios, accountants may insist on upfront payment or choose not to take them on at all.
Keep track of debtors
Another pre-emptive action accountants can take to reduce late payments is to keep track of their debtors.
Firms can automate and manage this process by synching Chaser to their accounting software and pulling invoices and customer data into the platform.
This allows for complete visibility of the status of debtors in one place, saving significant time compared to managing this process manually.
Invoices that fall overdue are flagged, with the Chaser platform offering a variety of solutions to get funds paid.
Chase late payments
Chaser can chase late payments with automated personalised email and SMS reminders. Adding your own touch to communication increases your chances of getting paid. SMS chasers can be particularly effective due to having open rates of around 98%, whereas emails only get opened 25% of the time on average. So payment chasing can be enhanced using a combination of automatic email and SMS payment reminders.
It’s also possible to notify clients of when payment deadlines are approaching.
Email and SMS reminders provide links to the Chaser Payment Portal, making it easy for businesses to pay by giving them an array of payment options to settle invoices instantly.
Any payments made against invoices through the Payments Portal are automatically reconciled back to accounting software.
Outsourced credit control
When clients still don’t pay invoices, cases can be referred to Chaser’s outsourced credit control team.
This option costs an additional flat fee per month on top of Chaser licences and enhances the chances of unpaid invoices becoming settled due to experienced, CICM-trained credit specialists stepping in to take action.
The outsourced credit control eases client relationships due to accountants not becoming personally involved in the chasing, with firms being able to choose which parts of credit control they need support with, as well as setting the number of hours.
Visibility is given on all client contact from the credit-control team, with details being logged on Chaser’s receivables communications log.
Debt collection
When all other efforts have been exhausted, Chaser can escalate extreme cases to a friendly debt collection service to minimise any instances of bad debt.
Similar to outsourced credit control, the Chaser collections service provides complete visibility on client communications in the software.
Chaser’s debt collectors are ethically trained, with no handover being needed due to them being able to access Chaser accounts.
Quotes for escalated invoices are more cost-effective than traditional agencies as prices are provided via instant no-win no-fee quotes, with accountants only paying for what they choose to recover. Where necessary, Chaser’s legal partner provide full management of any legal and insolvency processes.
Conclusion
Using Chaser to chase and recover outstanding invoices will minimize the risk of late payments and save time, without relationships being damaged.
TaxAssist, one of the leading accounting franchises in the UK for small businesses use Chaser to recover late paid invoices. The platform saves them 3 weeks of time spent on chasing payments each year, and in one instance they were able to recover £30,000 of invoices in just 30 minutes.
