Helping Clients Thrive Now (and Later)
In the age of COVID-19, business owners and consumers are laser focused on staying afloat, increasing the demand for financial advice from their CPA. But there’s one major obstacle to giving that advice: Even a firm’s best clients may be dealing with limited cash flow.
A Slowdown in Cash Flow
In an emergency, the pilot tells us to put on our oxygen masks before helping others. The same principle applies to firm management during a crisis. Accounting professionals face a unique dilemma in that much of their revenue is locked in accounts receivable. If struggling clients can’t pay their bills, their accountants can’t pay their bills or staff.
This creates something of a catch-22 for financial professionals, who are emotionally and economically tied to the fates of those they serve. As a former accounting firm partner, QuickFee CEO Bruce Coombes knows how heavy this burden can become. “When you’re a partner in a firm, it can be tough to weigh your clients’ problems against pressing internal needs, like rent and payroll,” says Coombes. “At the same time, accountants are close to their clients’ financial situations. We feel a duty to help our best clients avoid the worst outcomes.”
A Risk Management Mindset
Even the Big Four accounting firms have a hard time navigating these challenges. Take KPMG, one of the largest professional service networks in the world. With firms located in 147 countries, KPMG immediately felt the shockwaves of the crisis, as an inconsistent patchwork of health regulations reshaped global business practices overnight.
By confronting the health risks early and shifting into a risk management mindset, the accounting giant avoided much of the economic fallout. In an interview with Coombes earlier this year, KPMG COO of Enterprise Paul Green shared some insight on this approach: “I think that many organizations came into COVID with some degree of a balance sheet to draw on, and they’ve drawn heavily on that during the crisis. So, as we get further through this, there’s going to be more companies that are under pressure. We are certainly keen on managing risks and exposures around that fact.”
Put another way, firms must prepare for rough times ahead by carefully analyzing the risks associated with each account. In many cases, that means recognizing that clients will continue to wrestle with payment deadlines.
Powerful Payment Solutions
In May, the New York Times reported that contactless payment usage grew by 150 percent between 2019 and 2020. Now, more than ever, consumers need a variety of contactless payment options, particularly online payment processing. They also want plenty of modern payment alternatives, such as “buy now, pay later” (BNPL) payment plans, which are projected to become a billion-dollar industry in the next five years.
According to INSIDE Public Accounting (IPA), it takes an average of 64 days for accounting firms to get paid after completing work. Most invoices are still paid through the mail, putting a damper on firm cash flow. By offering BNPL payment plans, firms can significantly reduce their accounts receivable. Clients also benefit when they have the flexibility to pay their bills over time.
With an uncertain future ahead, it just makes good business sense for firms to have more financial tools to help their existing clients (and win new ones.) More importantly, payment plans can empower firms to keep doing what they do best: Advising and supporting their clients.
QuickFee is an NJCPA member benefit provider. Serving over a third of the IPA Top 400 firms, QuickFee offers easy online payment and financing solutions. The company also recently invested in sophisticated technology to bring non-recourse “buy now, pay later” style financing to professional services firms. Learn about QuickFee discounts for NJCPA members at njcpa.org/benefits.
This article appeared in the November/December 2020 issue of New Jersey CPA magazine. Read the full issue.