Like many accounting firms, you’ve most likely embraced the subscription payment model and the cashflow benefits it provides both you and your clients. Regular recurring revenue allows you to confidently invest time into building relationships with your clients, with the knowledge that you are being paid for your services as you go.
However, when faced with adversity, some business owners make the understandable decision to protect their cash and cancel the direct debits that we rely on to collect payment. By recognising why this is happening, who to invest your time in and how to best communicate with your client base, I think we can minimize the impact of cancelled direct debits (DDs) on our businesses.
It’s happening to everyone
Most business owners have probably been on the receiving end of at least one cancelation. Maybe even from a client who you thought you had a strong relationship with – one who you know has the means to pay your fees.
You might even have spoken to them about payment and then been met with a surprise cancelation the following week.
The first step in dealing with this situation is to remove the emotion that you will no doubt be feeling as much as you can. Business owners are making an emotional decision rather than a logical one and an emotional response will not help. Research has shown that reacting in anger can have a negative impact on performance and waiting only 10 minutes before responding can lead to a more logical response and better outcomes (Gneezy & Imas, 2014). Perhaps in many instances, 10 minutes over a cup of tea might not be long enough!
Identify who can’t pay vs who won’t pay
There will, of course, be some clients who simply cannot pay right now. But don’t cut them out! Include them in your mailing lists, keep them up to date as much as possible. These clients don’t need to be your biggest focus right now but, if you can give them a basic level of service, they will remember long after this period of uncertainty has passed.
Focus your time on the clients that can pay to make sure that they do pay! Just because they can doesn’t mean that they will. But if you’re proactive and invest your time and energy into clients with a high potential to pay, you will get the best outcome.
For your clients that have no capacity to pay, they might be better supported by regular updates and mailing lists with educational pieces around the support options available, rather than detailed cash flow forecasts and advisory. Wherever possible, defer payments rather than ending relationships and focus on what you can do in the meantime.
What’s in your control and what isn’t?
I know first hand the feeling of putting my neck on the line for a client and getting burnt. In a previous role, I assured my boss that my client would pay after I extended the payment terms for them, only to eventually have to write off six months of hard work when the client I trusted walked away from their limited company. I’ll never forget the waves of nausea that came over me and the feeling of having a brick in my stomach.
I made a lot of mistakes back then that were within my control and that’s why I got burnt. The journey that business owners and the accounting industry are on in 2020 is outside of our control – but the way we respond to the crisis is firmly within our control!
Kieran Phelan from Cloud360 accounting recently shared a video in the GoProposal community about how he dealt with a client in this situation, saying “I initially was really really peeved. I tried to reach him on the phone the following day but there was no sign of him… Over the course of the weekend I realised: none of this really matters. We just have to do the best we can, control what we can and accept the things we can’t… I’ve just spoken to the client and I said ‘even if you can’t pay anything right now, please don’t shut the door on us. We will help you.’ ”
I think this is an admirable attitude and I’m confident that Cloud360 accounting will come out of this storm with even more loyal and profitable clients than before.
The accountants down the road are not your competition, they’re your support network.
This isn’t about B2B sales anymore. This is about human2human relationships and coming together as global citizens to help out our clients and each other however we can. If you look at top performing cloud accounting firms, they all have one thing in common. They have strong relationships with other firms and they are generous leaders that share information and accept ideas in return. Now more than ever, we should be leaning on each other and sharing the failures without ego.
But that doesn’t mean spending endless nights on the phone with clients being a shoulder to cry on. Working smarter not harder is no longer a nice catch phrase to work towards. Using technology and video to communicate is no longer only for the minority who are trying to build a brand online. It’s non-negotiable and absolutely necessary to be able to survive and provide the level of service your clients need right now.
You are more valued than ever before
These days accountants are valued in a way that they have never been valued before. When you say to a business owner, “you should have three months’ cash reserves before you increase your dividend” they will listen. Although this year has been a tough one, I’ve heard countless success stories from firms who are visible, generous and genuinely making a difference to the lives of their clients.
So when you are faced with a client cancelling a DD, resist the urge to react emotionally. Instead, take the time you need to react logically and show your value through structured, technologically driven communication rather than 1-1 consultation.
The accounting industry is stronger together, so let’s support each other and share the learnings so that we come out of this storm stronger than ever before.