The new way to transform your cashflow
I’m going to share with you a quick 'cashflow' way to put money into your bank account.
It staggers me how many accountants and bookkeepers have debtors on their own balance sheet. They give credit – and that’s crazy!
We are in the service industry – nobody else in the service industry gives credit.
If you go to the dentist for a check up, before you leave you go to reception, book your next appointment and pay the bill. If you take your car for a servicing, afterward you pay the bill before you get given your keys. And in some services, you would even pay in advance. For example, we are used to now paying for our utility bills and mobile phone contracts by monthly direct debit.
So, why do we give credit?
We’re very lucky in the UK. We can use Direct Debit. It’s by far the best way of paying for professional services. And, in my opinion, the best solution is GoCardless. It’s very simple to use (for both you and your clients) and very inexpensive.
I’ve been using GoCardless for nearly two years. Every UK accountant on my mentoring programme pays me using GoCardless.
In addition, almost all of those firms I work with now use GoCardless to get paid monthly in advance. Here are two examples:
“We have sort of managed to achieve no debtors, although our listing shows about £5k. In saying that the listing represents a number of clients to whom we issued monthly invoices for 2015/16 services but they haven't signed up to GoCardless just yet; but then again, we have not actually done any of the work so far! So they are not real debtors. And we will now need full payment for the services once we hit 5th April and they will be asked to sign up to GoCardless for 2016/17 ( to start paying in advance).”
Kieran Phelan, K Phelan & Co, 4 February 2016
“With one exception all of my limited company clients pay monthly by direct debit through GoCardless.”
Patrick Cracroft-Brennan, Bambury & Co, 4 February 2016
At the end of the day, if you have cash tied up in debtors, that’s a choice. Kieran and Patrick have now made a different choice. It’s transformed their cashflow.
There is no doubt, GoCardless is one of the most amazing cloud tools for transforming cash flow. And even better, from 2016 it now integrates seamlessly inside QuickBooks Online (QBO). This means you can now manage how your clients pay you inside QBO.
The benefits of Direct Debit
Direct Debit is an automated payment method that allows you to pull payment directly from your customers' bank accounts. Once given a mandate by your customer, you can initiate Direct Debit payments for invoices on a date that suits you. Payments can be one off or recurring and can be the same or different amounts each time. Direct Debit payments are bank-to-bank, meaning there are no card networks involved, which helps to keep cashflow costs low and prevent many failed payments as a result of credit card expiration, credit levels being reached, etc.
Once a client is set up on GoCardless and is paying you for their compliance work via Direct Debit, whenever you are asked to do something new you can automate the payment.
For example, let’s image the client asks you to do a cashflow forecast and you agree a fee of £900. Provided you have agreed the fee and payment terms up front, as soon as that fee is due you simply go into your GoCardless account and collect your £900. It really is that simple.
No more debtors. No more slow payers. No more bad debts. No more chasing money.
About the author
Mark Wickersham FCA
Mark Wickersham – Chartered Accounted, public speaker and #1 best-selling author – is known as the most sought after profit improvement expert in the accounting community.
Mark is also a widely published author on practice issues. In May 2011 his book, “Effective Pricing for Accountants”, was a number 1 Amazon bestseller.
You can get a free copy of his eBook, “How to price accountancy services for maximum profit” here, http://www.EffectivePricingForAccountants.com.
Click here to download a special VIP voucher code where you can get a free version of my Cloud Pricing software.