Bad payers are prevalent in small businesses. They are crippling them and many accounting firms as well.
Most people do the work, send out an invoice, then cross their fingers that at some point soon the client will pay. Hopefully within our payment terms. Hopefully within the next 30 days.
That’s a huge problem. Very often they don’t pay in time, or even at all.
We could build in our payment terms into our engagement letters. We could put it on the invoices.
But we know that very often clients ignore those terms and they pay when they feel like it or when they have the cash available.
Click here to watch the full video, or if you prefer, you can carry on reading below.
We are giving a service - we should be paid upfront
We are in the service industry. It should not work like that. We should not be acting as a bank and giving credit and lending money.
We should be paid upfront.
That’s how it works in the service industry.
Think about the last time you took...
I’m going to share with you the 4 types of buyers.
Once you understand their characteristics it will help you with your pricing.
If you want the full details, you can watch the video here.
#1 - The price buyer
The price buyer is the person that shops based on price. Price is the most important thing they are looking for.
They are price sensitive.
Thankfully, research shows there aren’t many of these types of buyers in society. It’s typically estimated this group make 15-20% of buyers.
These people aren’t entrepreneurs, they aren’t high net worth individuals.
They’re not the sort of people you might have in your client base.
#2 - The value buyer
The value buyer buys based on value.
Price is still important, but the value of what they get is of even more importance.
When we think about the value equation, it’s essentially made up of the benefits someone gets when they buy minus the cost or price. A value buyer is looking to maximise...
As a profession we are way too cheap.
We aren’t charging enough. Which is why every accountant and bookkeeper I speak to is telling me they are working long hours for too little money.
We have to put the prices up.
You can watch my video here, or by clicking the thumbnail below. Or if you prefer you can keep on reading.
Here’s how you do it:
Step 1 - Reframing
Existing clients know what you charged last year. They have a reference price.
Let’s imagine last year you charged $2000. This year you know you need to put your prices up by 20% to $2400.
The first thing you have to do is make it more difficult for the client to compare the price to last year's by reframing it. We need to change the way we express the price.
A strategy I use is called ‘chunking it down’, to avoid revealing a headline price. It’s easy to compare last year’s $2000 to this year’s $2400. But if we express that price as $200 a month, it isn’t a straightforward...
This is one of the most common questions I get asked.
First we need to understand, what does value pricing mean?
Simply, it means that we come up with a price based upon the clients’ perception of the value of what we do.
You can watch the video here, if you prefer. Or carry on reading.
Get rid of time-based billing
When we increase the value, and when they see and understand that value, they will pay a higher price. The price is based on value, not on old-fashioned redundant ways of pricing based on time.
There was a study done back in 2005 by a major software company, that asked thousands of business owners “What do you hate most about your accountant?” The most popular response was surprise bills.
With time-based billing the client doesn’t know the price until all the work has been completed.
Therefore, clients actually love value-based pricing. It’s in their interest because we are moving away from the shock of time-based bills, which customers...
The other day I received a lovely little package through the post. It kind of blew me away when I got it, I was seriously impressed.
Just to put this into context, this present arrived along with a thank you card from Reza Hooda, someone who I’ve mentored now for several years and helped with his pricing.
The card reads:
It was a lovely little message and he is someone who is doing incredible things in his firm.
Now, often accountants and bookkeepers may send a thank you note to their clients, perhaps with a bottle of wine or some such gift. But I think Reza’s gift takes this to a whole other level.
Firstly, it was beautifully packaged, with Reza’s firm logo Walji & Co on the case. Then inside was a beautiful really high quality power bank, a branded charger for the car, a portable speaker and a USB drive.
Watch the video here and you’ll get what I mean.
It’s something of high quality and real use to me. Something I will keep.
You should be doing...
Is the bookkeeping profession is crisis?
There is such a huge amount of change going on in our profession right now.
We are seeing the rise and increase of Cloud accounting. We are seeing artificial intelligence, machine learning, automation like bank feeds, and not too long ago we also saw Intuit QuickBooks launching Bookkeeping Live - alive bookkeeper, at really low prices.
What we are going to see over the years to come is increasing downward pressure on prices for compliance work and particularly for bookkeeping.
If you are a bookkeeper, CPA, accountant, or do bookkeeping services, this blog is for you.
I’m going to share with you my thoughts on where the profession is going and how we can overcome that.
How do we rise to the challenge? How do we make sure that we can continue to build a very successful accounting practise? How do we beat technology, outsourcing, low cost competitors and now software companies that are getting in on the bookkeeping action.
Here are four...
It’s all over Facebook. It’s all over Twitter.
I’m sure you must have heard by now about this new test that Intuit are doing with Live Bookkeeping.
This has struck a nerve for many people, and all over social media I have been seeing angry comments and complaints.
Many people have already come forward with their thoughts on the situation.
Kirk Bowman says in his and Hector Garcia’s Podcast What If Intuit/QuickBooks Offer Bookkeeping Services?:
“My take on this, is that it is no threat to professional bookkeepers and accountants. In my opinion Intuit is reaching out to serve a segment of the market that they currently perceive is not being served. I don’t think they are trying to go into competition with their ProAdvisors.”
I agree with what Kirk is saying here. In fact both Kirk and Hector make many great points on their podcast.
I recommend you check it out here.
I thought I’d give you MY take on the situation, and...
The world is changing fast.
We now have Cloud Technology and Cloud accounting that automates a lot of the work we do. The old compliance work its getting automated through machine learning and artificial intelligence.
As a profession, we have to change.
We have to start doing more for our clients, and one of the things we can do is help them increase their profits.
This isn’t so straightforward. You can’t manage profit. You can’t go into a business and improve profit by focusing on profit.
What we have to do is understand what drives profit.
You can watch the full video here.
What are the drivers of profit?
There are a number of different drivers of profit. We can build a mathematical model that predicts profit and allows us to see what is impacting on profit and how it does that.
I want to share with you some of these drivers to give you an indication of how we can start helping our clients to improve their profits.
We can start by thinking about a set of...
I recently filmed a video where I shared the 9 biggest pricing mistakes made in the accounting profession. Click here to watch the full video.
As a profession we are way too cheap.
It’s why we are working crazy long hours and not making the money that we deserve.
So we have to rectify that by putting up our prices.
Copying the Competition
Most accountants and bookkeepers are too cheap.
When we try to win new business, we tend to look at what our competitors are charging and use that as a basis. But if they are too cheap, it makes no sense to copy them.
There is a reason the client is talking to you. There is something about their current accountant or bookkeeper they are not happy with.
So if they want better services and better quality, they should be prepared to pay more than they currently are.
Prices on a Website
People put their prices on their website because they want to win more business. But if you put high prices on your website no one will ever contact...
Reza Hooda used to price based on a mixture of hourly rates and gut feeling.
Then he learnt about value pricing through my mentoring programme and it completely transformed his business.
In the interview he says:
“I could see how time-based billing was completely ludicrous. So we scrapped that idea completely, and then started to price much more based on value.”
An opportunity arose for Reza to use his newly learnt value pricing techniques to price an incorporation project involving a property client.
By using menu-pricing
He sat down with the client and worked out what they wanted to achieve and where the value in his service was.
Based on that, he prepared a proposal and, using the menu pricing tactics, presented his client with 3 options.
It was priced at £66,000. And they accepted it.
By using the Cloud Pricing software
Reza used to price his compliance work by charging a similar rate to the client’s previous accountants.
But since having a software based...