Studies have marked accountants as 1 of 6 common businesses that are highly exposed to trade credit debt, so how do you protect your income?
News was recently released that The Australian Financial Security Authority (AFSA) has marked accountants as one of those highly exposed to trade credit debt, putting them on par with secured bank debt. Given the current economic climate, this may continue to become an issue.
Given this news, how is your Accounting firm currently positioned to deal with these risks?
While it might mean you’re more cautious about the clients you take on in the future, it’s also important to put systems and processes to mitigate this risk with current clients.
Rebecca Mihalic, Director of businessDEPOT Sydney, and resident Head of Accounting for Practice Ignition wrote a response article on this topic which you might find interesting. You can read the full article here.
“The best way to safeguard your position is to have a clear engagement detailing the services you will provide, how much you will charge for and how often. This is the foundation of a move to fixed fee invoicing and not only does it provide clarity for all parties involved in the engagement, but it is also much easier to recover your fees if they have been clearly detailed in advance.”
Implementing a tool like Practice Ignition will save you hours of admin time by streamlining your engagements and payments all in one place. Integrate with your cloud ledger, such as Xero or Quickbooks Online, create professional proposals in minutes, select an engagement letter from the templates library and take payment up front to reduce any opportunity for bad debt.
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