Two years from winning a client to getting paid

Take on a limited company client in April, at the start of their financial year.

You do not prepare the accounts until after the year end, which is twelve months away. Then, because the deadline is nine months after that and other things keep being more urgent, the accounts get done somewhere close to the deadline rather than shortly after the year end. You raise the invoice at that point. The client takes a month or two to pay it.

Add it up. Twelve months, plus nine, plus two.

Twenty three months from taking the client on to being paid for the work. We are accountants. We are the people who teach clients about cash flow.

That is an extreme version, and plenty of firms are quicker. But the shape of it is completely normal, and the shape is the problem, not the extremes.

The mistake is attaching the money to the deliverable

Annual billing rests on an assumption that nobody says out loud: that the client is buying a set of accounts, so the money should arrive when the accounts do.

That is not what they are buying, and you know it from the year you have just spent with them.

They emailed in June about whether to buy the van through the company. They rang in September because HMRC had written to them and it looked frightening. You were their agent throughout, so their post came to you, and you were the one watching their deadlines while they got on with running the business.

None of that produced a document. All of it was the service. If the invoice only appears when a deliverable does, then everything that made you worth having was, on paper, free. Worse, you have taught the client that it was free, which is a difficult thing to reverse later.

This is the same argument as what clients are actually paying you for, arriving from the direction of your bank balance rather than your value.

What changes when the fee is monthly

Three things, and only the first is about cash.

You get paid while you work rather than long afterwards. The gap between doing the work and being paid for it stops being a feature of your business model.

The client uses you properly. Somebody paying monthly for access behaves like somebody who has already paid for access. They ring. That sounds like a cost until you notice that the client who rings is the client who stays, and the one rationing their own questions is quietly deciding you are expensive.

You can price a relationship instead of a job. Once the fee is monthly, the interesting question stops being what a set of accounts is worth and becomes what a year of you is worth. Those are very different numbers.

"My clients would never accept it"

This is the objection every time, and it is almost always untested.

Notice that your clients already pay monthly for a great many things they care about far less than their accountant. Their software. Their phone. Their insurance. Their car. Monthly payment is not an unusual thing you are asking them to tolerate. It is the normal way people buy anything ongoing.

What is actually happening is that you have not told them. Payment terms feel like something to be negotiated, so they get left vague, and a vague term always resolves in favour of whoever cares less.

Your terms of business are yours. It is your firm. Monthly by direct debit is not a request you are making, it is how you work, in the same way that your year end procedures are how you work. Set out plainly at the start, it is accepted almost without comment. Raised apologetically six weeks in, it is a negotiation.

The one exception worth making

There is a version of annual payment worth keeping, and it is the opposite of the one above: the client pays the whole year in advance.

Some clients, particularly larger ones with cash sitting there, would genuinely rather settle the year in one go than watch a direct debit every month. For that, a small discount is fair. Five per cent is plenty.

Look closely at what that is, though, because it matters. It is not a discount. It is an exchange. They are giving you the whole year's cash up front, before you have done any of the work, and you are giving them something back for it.

That is the whole test, and it is the same test in every other situation where you are tempted to reduce a fee. If the client is doing something for you, a discount is a trade. If they are not, it is just a lower price with extra steps.

So there are two ways to pay you: monthly by direct debit, or the year in advance for five per cent off. That is not a restrictive set of options. It is a clear one, and clarity is what stops the conversation drifting.

Moving a practice that already bills annually

You do not need to convert everybody, and trying to is how this gets abandoned.

Every new client from today is monthly. No exceptions, no special cases. This costs you nothing, because there is no existing arrangement to unpick, and within a year a meaningful share of your fee income has moved without a single awkward conversation.

Existing clients move at their renewal. You are already having a conversation about their fee for the coming year. Changing how it is paid, at the moment you are agreeing what it is, is a much easier sentence than raising it out of nowhere in February.

Do not run both models indefinitely by drift. Some firms are still carrying annual arrangements from a decade ago because nobody ever decided to end them.

The part that is easy to miss

Charging monthly does not increase your fees on its own. The same client at the same price paying twelve instalments has not made you a penny more.

What it does is change what the fee is for, in your mind and in theirs. It stops being the price of a document and becomes the price of having you. And once that is true, everything else becomes easier to argue: the minimum fee, the three options, the annual increase. They are all versions of the same claim, and the claim only holds if the money arrives the way an ongoing service is paid for.

In Power Pricing every service is priced monthly by default, the proposal shows the client their monthly investment alongside anything one-off, and the engagement letter sets out what those monthly payments cover. Not because the software has a view about your business, but because the alternative is the twenty three month wait, and no practice was ever improved by it.