Conventional payment methods still favoured by accountants despite missed savings.
The annual Orchard Fee Funding Accountants Pulse Check reports that the majority of practices around the country still rely on traditional methods when it comes to receiving payments from their clients.
97% of participants in the survey offer payment by cheque, 70% offer standing orders, 30% provide a direct debit facility and 29% offer payment by credit card. Surprisingly, a minority (8%) accept cash.
Of the 30% who said they offered direct debit facility, less than one in five (16%) operate their own in-house facility.
Orchard director, Chris Meyer, comments: “I find it surprising that more practices have not fully investigated the specialist accountant fee funding marketplace. With no cost to the practice, administration default reporting and 100% funding of the clients fee why use internal standing order or external unfunded direct debit collection providers?”
He goes on to explain: “Direct debit is a universally recognised standard monthly payment method for both individuals and SME businesses. It gives the client certainty and peace of mind as to when collections will be made and gives an accountancy practice with a uniform, rigid collection vehicle. If provided by a funder there is the added benefit of instant default reporting, so the administration is done for the practice unlike standing orders. Some practices say they have their own facility when in reality it is an outsourced service provider who just collects and pays the sum less a fee over to the practice usually after five working days but less than 10. Why use this option at a cost to the practice when they could use a fully funded, no obligation to use facility with absolutely no cost to their business at all?”
Meyer adds: “Setting up their own originators reference for direct debit collections is expensive for a practice in terms of a bond fee and they will also need to find a sponsor such as a bank. In the current climate, very few businesses with a requirement for less than 10,000 individual direct debit collections will be successful in setting up their own facility.”
When it comes to fee funding, over a quarter (27%) of respondents said they had considered it but only a small percentage of respondents (less than 5%) had actually put a fee funding facility in place.
Meyer says: “Some view fee funding as a distressed purchase – a last resort for clients struggling to pay. Others wrongly believe that you have to have a big practice for fee funding to be a viable option and that it’s an administrative nightmare to set up and monitor when actually the reverse is true. Fee funding is suitable for any size of practice and any level of business and there is no requirement for additional staff to manage the facility – in fact you will free up staff time to concentrate on other tasks. And it means that the practice isn’t giving an interest free loan or credit terms to the client.”
“Fee funding shouldn’t be seen as a last resort, rather it should form part of a firm’s good financial management practice, providing them with another payment option for their clients that is often more cost effective than direct debits, standing orders and credit cards.”