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Debt Collection for New Zealand Accountants

Many businesses are in the habit of putting their accountants invoice at the bottom of the heap. They seem to think that their accountant must know the situation the business is in regarding cash flow so will understand if they aren't paid promptly. The trouble with this of course is that the accountant also needs to run their business, and can't do so without cash flow to pay their expenses. But you already know this, don't you ?

We help several accounting firms with the collection of their overdue accounts. The key elements for successful collection of overdue accounts for accountants are:

Terms and Conditions: You should have your clients sign a contract when they engage your services. Signs in reception higlighting the fact that collection costs can be added will also help, but for an expensive, professional service, with accounts running into the multi thousands each year, a terms of engagement letter, counter-signed by the client, which includes a reference to collection costs being added to the account, is essential.

Credit Control is very important. Whether you use an outside agency or do it in-house. Accounts should be followed-up routinely. The credit control process should include a clearly defined cut-off point - typically 90 days - when a seven day letter will be sent. If the debtors do not pay within that seven day period, or begin an acceptable payment programme, then the account should be sent to a collection agency.
Collecting good information regarding your clients will help the collection agency persue the debt. This is best done at the beginning of the relationship, but should also be updated whenever possible.

One advantage accountanting firms do have of course is that you can refuse to pass on records to a new agency unless and until accounts are paid up !