Posts Tagged ‘collection policy’

Tuesday, October 8th, 2013

CPA Firm Collections – You Are Running A Business

photoDuring my consulting and advisory work with firms, the collection policy topic comes up on a regular basis.

When I am talking with a group of CPA firm administrators and the topic of collections comes up I observe almost all of them rolling their eyes when I ask, “Do all your partners follow the firms collection guidelines?”

It is one of those many things inside a CPA firm that is fairly simple but that seems to become complicated when you are dealing with multiple partners. My message to CPAs: You are running a business and effective collections is a basic business activity.

Here’s my thoughts on CPA firm collections.

A documented, widely published Collection Policy is the foundation for good cash flow, the life blood of a firm.

  • It must come from the top – all owners.
  • They need to meet, discuss all of the options and arguments then come to agreement on what they can truly live with, for the good of the firm.
  • Management drafts the document and all owners review and approve.
  • The written policy is communicated to all team members and is posted on the firm’s Intranet.
  • Everyone involved – managers, staff, controller, administrative assistants, firm administrator thoroughly understands and monitors compliance with the policy
  • AR statements should be mailed monthly to ALL unpaid accounts, no exceptions.
  • Your collection administrator should routinely write notes/requests on the AR statements when there is a difficulty with collection.
  • A service fee should be applied for balances over 30 days.
  • Collection should be performed by a part-time administrative person (collection administrator) who is skilled in client communication and has no other priorities. This person’s role is also defined in writing and they operate within certain parameters.
  • They begin calling (not emailing) at 31 days. I used to say 45 days but during the current economic downturn it is better to do it sooner.
  • When the collection administrator exhausts all avenues with a particular, difficult client or when it ages beyond 90 days, it goes back to the partner in charge of the client account for collection, along with Managing Partner involvement.

When I receive calls from firm leaders seeking my assistance, they often tell me that they seem to be at a plateau or crossroads. They lack documented systems and procedures and things like collection are causing friction.

Take action now, during the Fall months. Break your processes down into manageable bites and develop simple steps, like the ones above for collection.

The bottom line – all partners must agree to follow the published procedures, if they cannot, they must keep working on the policy until they CAN all agree.

  • Almost all quality improvement comes via simplification of design, manufacturing, layout, processes and procedures.
  • Tom Peters

Friday, August 10th, 2012

The Client’s Responsibilites

Inside your CPA firm, do you have a partner who is always on top of the accounts receivable for the clients they are assigned? Do you have partners who seem to have an unusual amount of slow-payers on their client assignment list? In my experience, most firms have partners who fill both of these roles.

If you are honest, open, upfront with clients as they begin the relationship with you and clearly explain the firm’s expectations, past-due accounts receivable and many other problems remain absent. I like to see firms use a Commitment Statement at the beginning of any client engagement stating what the firm will do and the expectations the firm has for the client (what the client will do).

Seth Godin had a good blog post recently on this topic titled, Train Your Customer. He noted that we (by our actions) can train them to do good things and some not-so-good things.Here’s a few of the things he suggested you can train clients to do:

  • Be respectful
  • Be patient
  • Spread the word


  • Expect pampering
  • Demand free
  • Be cheap

Why not include a statement of client commitments along with the welcome letter you send every new client outlining your collection policy. One of the biggest challenges I hear from firm administrators is the fact that partners will not actually talk to the clients about paying late, submitting their tax information at the last minute and so on. I believe that clients actually wonder what they are suppose to do and are waiting on someone to tell them.

  • Try not to become a man of success but rather try to become a man of value.
  • Albert Einstein