We all know of everyday examples of cash flow needs our clients experience. Below are a few examples of ways firms face cash flow challenges in the practice and with clients as well as ways they might be resolved:
Your firm is performing a financial statement audit for a client as required by their bank and you have been doing the audit for years. The client relationship is strong and they’ve approached you for additional services they believe will improve their market share; however, they’re already paying a substantial fee for the audit. Your client is confident that the additional work will pay for itself, but cash is tight and they need to start now…
A referral comes through to help a new client with setting up their self-managed super fund and associated gearing arrangement. They tell you their money is tied up in other retail funds at the moment and they can pay you once the money is transferred from their current super account into the new SMSF. You know that you need to pay the costs involved to set up the 2 corporate trustees, arrange the SMSF deed and the bare trust deed along with your fees for advising on the structure. You expect that you’ll be waiting 90 days for payment…
Your firm has audited a client’s 2012 financial statements and they’re yet to pay you for your services. Independence becomes a concern when your firm is deemed a “creditor” for a substantial amount of outstanding fees. The client is waiting for a deal to go through from which they’ll have sufficient funds to pay your fees in full, but your staff need to begin procedures for the 2013 audit to stay on schedule…
Fee funding is a solution for professional firms, and their clients, whereby the cost of your services is spread into manageable monthly instalments whilst still enabling your firm to be paid in full and on time. Clients enjoy a cash flow benefit and realise the value of your services sometimes even before they’ve fully paid.
It’s rare a service is available with a significant benefit to accounting firms at no cost to your firm, but fee funding is one such service so if that is of interest, take a look at QuickFee.
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