A Few Tips on Collecting Payment from Clients
Hello, my name is Nyrie Sarkissian and I am the owner of Tax Prep A-Go-Go. You have to say my company name with some pizazz. Tax Prep A-GO-GO! I have been preparing tax returns for over 15 years. It all started when my best friend came to me in 2006 and said, “I haven’t filed a tax return for 4 years”. I sprang into action and here we are today. From learning how to fill out a 1040 manually 15 years ago, to now – using TaxAct®, first-class professional tax preparation software.
If you’re anything like me, you hate collecting outstanding invoices. I once hired an intern just for the purpose of calling clients with outstanding invoices to ask for payment, so I didn’t need to make those uncomfortable calls. It can be awkward asking someone, who owes $12,335 in taxes, to simultaneously pay your invoice. But why should this be? When a drycleaner cleans your clothes, you pay the bill. When a pet groomer grooms your dog, you pay the bill.
Why is it that when it comes to filing a client’s taxes, you find yourself in one of two positions; feeling fine asking for payment because your client is getting a great refund, or timidly asking for payment because your client owes taxes? How did this become our problem when it comes to charging for our services? Why should we feel any differently about charging for our services based on our client’s tax obligations? After all, it’s not any fault of ours if our clients owe taxes.
In my earlier days, I found myself giving discounts to clients who owed taxes and collecting in full from clients who were expecting a refund. It is wrong to give some clients a deal just because of their own tax liabilities and I regret ever doing this.
We work hard to perform our job. We do what we are trained to do, and we utilize resources to make sure that our clients are getting the credits and deductions due to them. We should not be made to feel badly because of their situation!
So, how do we make it easier to get paid?
Here’s my advice:
- State your fees clearly: Make sure your fee is clear, stated up front, and agreed to. Make sure that any adjustments you may have to make to your invoice are presented to your client in advance or your services (depreciation, additional forms, revisions).
- Invoice first: Send out your invoice before you file your clients return. Make sure that they are aware of how much they owe you before you hit SEND on the electronic filing.
- Offer options: Some of my long-time clients pay half of their invoice up front and the other half when they receive their refund. This is risky, as you are still in the position of having to ask for the balance. But if you trust your client and their ability to pay, it helps to ease the pressure on them.
- Implement a late fee: I include a late fee penalty on my invoices. It’s customary, we’ve all be subjected to it before, and it’s an easy way to ensure that your clients know it’s imperative to pay the invoice on time.
This article is for informational purposes only and not legal or financial advice.