Tips to Keep Accountants Profitable with Positive Cash Flow

Accountants are usually the first one called upon when a business owner is concerned about the profitability of a company. They have a finger on the pulse of a business and can usually quickly pinpoint where too much money is going out or not enough cash is coming in.

What happens when professional accountants and CPA’s have issues with keeping cash flowing into the business due to past due payment customers?

Accountants are at risk just like any other business that provides services on credit and expects clients to pay at a later day. Eventually, a few clients will fall past due and accounts receivables will grow.

This is a common story for any accountant who has completed the books for a small business. Increasing accounts receivables each month cash flow stays flat or even decreases.

This is when an accounting should hire a collection agency to represent them in collecting from the past due customers who simply are refusing to pay.

Collection agencies are willing to work with small businesses such as accounting firms on what is called a contingency rate. In simple terms, this means the collection agency will charge no money up front for the collection efforts and will only get paid a percentage of the money collected after they have actually collected payment.

How much does a collection agency charge? Well, that depends on how old the past due accounts are. If accounts are over a year old, the rate may jump up to 40% due the increased difficultly of collecting such an old debt. If the accounts are under 90 days old, the rate could be lower than 20%.

Staying on top of the accounts receivable and turning the accounts over to a collection agency early in the process will help keep accounting practices stay profitable.

Tips to Grow an Accounting Business

Focusing on helping your existing client base the highest level of service will help grow your business fast. If you provide excellent customer service and accurate books, CEO’s and business owners will likely refer you to counterparts within the business community they operate.

Word of mouth marketing is the oldest form of advertising and will always work for an accountant starting out but the growth may not be fast enough.

If an accountant wants to grow their business at a rapid rate, they may look to invest in professional accountant marketing services that include things like a high-quality website, Google Ads, social media marketing, newsletters, or even old school methods such as radio and print ads.

The new generation of business owners looking for an accountant will probably be doing online. They are many services online that help small businesses find accountants who can provide excellent services at a fair rate.

Keeping a steady stream of new clients coming into an accounting business will provide assurance that profitability will improve.

If any clients fall past due, you now know the benefits of using a collecting agency which will only further insulate your company from the common pitfalls of decreasing cash flow and growing accounts receivables.