Depending on which professional fence you sit on, you could perhaps argue for or against. You could be the most ruthless lawyer in court or an accountant that critically assesses financials to point zero of a cent. But why is it so difficult to get paid for a service you’ve already provided?
Accountants and lawyers tell us quite often that they continue to provide months, sometimes even years, of legal or accounting services without seeing a cent in return. The predicament: You know your client needs the service, you need the business, yet most professionals we speak to don’t want to get into ‘that’ conversation with their client. You know the one. That awkward conversation that can create friction and even put pressure on your clients when they just don’t have the money to pay you.
Some accountants decide to give clients an ultimatum: “We won’t lodge your Business Activity Statements until you pay us”. This can increase the probability of being paid, however there are some underlying issues which often go unaddressed.
Let’s take a look at the common small medium enterprise (SME) client. Research show that the average amount an SME will spend on legal fees each year is $39,000 with 75% of these clients preferring fixed fee billing arrangements. Unfortunately, this is a primary reason that 35% of SMEs have changed their lawyer in the past 12 months.[i]
Unfortunately, the story is similar for accountants with 23% of SME clients believing that their accountant’s fees are unaffordable. [ii]
The client stories and statistics present a common issue. Perhaps the problem is not necessarily with the fees directly, but rather that that the situation creates a communication issue.
I’m not one for hypotheticals but let’s say for instance, you need an expensive medical operation and you have to pay for this service up front. After paying for the operation in one lump sum, you later find out that the medical practice could have offered the same medical operation but on an affordable payment plan. The likelihood is, if they had offered you a payment plan up front, you may have preferred this option. More importantly, you are probably thinking “it would have been nice if I was offered this option in the first place”.
Months have passed and unfortunately you need another operation, do you go back to the same medical practice or perhaps shop around?
Whilst the example above is of a different profession, the dilemma for SMEs is the same. SMEs need professional services, however according to statistics, they want alternative payment options.
Experience has also shown that the longer you leave outstanding invoices, the harder it becomes to collect on the payments.
With the stresses that we hear from professionals and their clients, we can see both parties are equally strained. The good news is that all these situations can be prevented in the first place.
Smartfee works with accountants and lawyers to ensure they are being paid for their professional fees up front and in full. We also ensure that the SME client is on an affordable payment plan so they are able to obtain services when they need it from their accountant or lawyer. We manage this process on behalf of the professional firm allowing both parties the timely cashflow they need without the hassle.
How do we know this process works?
Smartfee has been servicing professionals and funding their clients for over 20 years. We understand the needs of professionals and the importance of client relationships. Our personal approach may be old fashioned, but it means professionals and their clients not only know us on a first name basis, but we also manage all accounts to ensure payments are on track.
How does it work?
We provide your clients a flat monthly instalment plan to pay off their invoices issued by you. You get paid for your invoice up front and in full (after the first instalment clears), and then your client repays the invoice to SmartFee over monthly instalments. SmartFee also provides this service completely free of charge for accountants and lawyers.
If we refer back to our original question of whether accountants and lawyers are just too nice, at the risk of being referred to as ‘fence sitters’, the argument really speaks for itself. The facts are that professionals simply do not have the time to be chasing payments, and small businesses which are often dealing with cashflow issues need payment options which are business friendly. SmartFee is both.
Please contact our team on 1300 723 243 or email [email protected] if you have any questions.
[i] NAB Australian Legal Services Industry Survey 2019
[ii] NAB Australian Accounting Services Industry Survey 2019