| START
OFF ON THE RIGHT FOOT.
 Be sure to price your services as
high as they should be. Underpricing can increase
pressure on you to maintain revenue by hurrying
through complex tasks, increasing the chance of
error and liability.
Work with credit-reporting services
to identify problem clients before accepting
engagements. Where possible, check clients’
payment history with their prior CPAs. Listen
carefully—sometimes what they don’t say is
important. Fearful of liability for slander,
practitioners are more likely to praise a good
client than criticize a difficult one.
Use an engagement letter to spell
out the scope of the work you will perform for a
client. Consider including an estimate of your
fee, noting that unforeseen circumstances or
changes in the engagement could make a revision
necessary.
Provide full details of pricing and
payment methods in client and customer contracts.
Request a retainer at the beginning
of an engagement, especially from clients with a
poor credit history.
KEEP CLIENTS AND CUSTOMERS INFORMED
OF WHAT THEY OWE YOU.
Bill only for tasks within the scope
specified in the engagement letter. Charge for
additional work only with the client’s written
permission.
Keep invoices simple and easy to
understand. In the event of a legal dispute, bills
that are precise, accurate and agree with other
engagement documentation could decide the case in
your favor.
Negotiate a mutually convenient
billing cycle with your clients. Then, bill for
completed tasks as soon as possible, while the
work is fresh in their minds.
Keep billing up-to-date so you won’t
hesitate to end an engagement before completion
because of outstanding receivables.
GET PAID ON TIME.
Establish billing and collection
procedures and understand their legal
ramifications. The primary law governing
collection programs is the Fair Debt Collection
Practices Act (Public Law 95-109).
Consider allowing clients and
customers to use credit cards or promissory notes
as payment options. Credit cards are convenient
for them and—if you’re willing to pay bank
fees—enable you to spend less time on collections
and more on developing new business. State laws
govern the terms of promissory notes, but within
those limits you can customize the notes to suit
your needs and those of your clients.
Never withhold a client’s records
for nonpayment of your bill. The AICPA (see Code
of Professional Conduct) and most states do not
regard a client’s failure to pay fees as
sufficient justification for a firm to withhold
the client’s records. Check with your state board
of accountancy to confirm its definition of
“client records.”
Closely monitor and document
clients’ payment history. When payments are late,
speak directly with the client’s accounts payable
manager and ensure that he or she understands the
terms of your agreement.
Ensure that senior staff within your
organization review bad-debt write-offs and inform
other operating units of customers or clients who
have defaulted.
Consider using a collection agency
only after you have done everything possible on
your own to settle the account.
If you consider suing your client
for nonpayment, be sure also to consider mediation
and arbitration, which are less confrontational
and consume less of your time and money,
especially if your client counter-sues you. Note
that while arbitration is legally binding,
mediation is not. | 
