Today is the first day of the rest of your life. Will you invest it wisely? An investment that you should make is an investment of your time “bear hugging” your best clients. Many of your clients are concerned and confused about what to do or not do in the current economic crisis. As their most trusted business advisor, you can help alleviate many of their issues by being proactive with meetings, phone calls, seminars, newsletters and communications regarding the present situation.
- Set up at least 25 phone or face-to-face meetings with each of your top 25 clients over the next 30 days to listen to and discuss your clients greatest concerns. Their concerns could include economic viability, tax strategies, gaining capital or expansion opportunities? If you have partners, ask each partner to do the same.
- Invest about 15 minutes of thinking time, before calling your client. Sit back and think about each client and draft a few specific thoughts that may apply to each one. Then call your client and set an appointment to go visit them as soon as possible. CPAs who do this have reported increased revenue from tax planning and capital formation projects.
- Keep your clients close by “Bear Hugging” them with proactive and insightful service. Every time that a CPA firm performs this exercise, they find one or more clients who were thinking about leaving and taking their business somewhere else. Don’t let that thought even enter your client’s mind right now. These days can be terrific days for you, if you step out and meet your clients.
Mind Your WIP and AR Like a Mama Bear
The first signs of client’s financial trouble will begin showing up in your work-in-process (WIP) and accounts receivable (AR). What a travesty it would be to lose large amounts of earned revenue because the clients cannot pay your bill. You have worked hard. Your partners have entrusted you with the resources to serve your clients. Don’t lose money from clients whose businesses fail during the tough times. Already there have been reports of thousands of small businesses filing bankruptcy.
You deserve to be fully paid for your excellent service and your partners expect that you will raise your level of diligence and lower the risk of squandering your firm’s capital resources.
Take time to reduce your firm’s investments in WIP and AR to less than 45 days of net-fee revenue tied up in these assets. If you are having difficulty in this area, here are a few things you can do:
- Reduce your WIP and AR to less than 45 days of sales by the end of June 2010.
- Let all your billers know that you are serious with this plan by setting weekly targets and monitoring them diligently.
- Communicate with slow-paying clients around your new policy.
- Insist on advance retainers and progress payments for all work done in the New Year.
- Ask tax compliance clients to pay in advance or immediately upon delivery.
- Have serious conversations with any client whose AR balances are more than 30 days past due and get a note payment schedule in place for the past due amounts. This will enable them to move forward on your new plan of retainer and progress billing.
- Assign a firm administrator or collections person to help with calling clients, working with your billers, supplying copies of invoices, picking up checks and more.
- Monitor your collections weekly.
It is absolutely possible to reduce your total investment in WIP and AR in less than 30 days. You will hear all kinds of excuses. Don’t listen to excuses. Expect results and you will get them.
Scour the Market Like a Papa Bear
During these tough times, many of your competitors will bury their heads in the sand. Now is the time to get down to business, when they have their head buried. They don’t even look at their own 401(k)s because they’ve turned into 301(k)s. And they are not going to be proactive with their clients like you should be. So now is the time to draft a list of the 25 best prospects for your services in your city or region and send them a letter or, better yet, make a phone call and offer to review their situation in relation to the tax, financing or other issues facing them during these uncertain times. Ask each of your owners and managers to do the same thing so that you can be even more successful.
Many professionals are naturally reactive and will wait until their clients call with issues before responding. If you call their clients first, then you may be able to capture some excellent market share during the next difficult months!
The next few months are years are going to be difficult for all businesses. You can be a victim of the times, or you can step up and gain market share from your weak competitors.
If you decide to have the client briefing lunches, consider inviting one or two prospective clients to each one. This is an opportunity for your prospects to hear what your clients say about the great service they have received from you.
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Troy Waugh, CPA, MBA, is author of two books and has been selected as one of the 100 Most Influential People in the Accounting Profession for 10 years in a row by Accounting Today magazine. Don’t miss Waugh’s presentation at the upcoming AICPA Practitioners Symposium, June 7 – 9 in Las Vegas, NV. He has helped firms add more than $600 million in new business through their consulting, training and alliance services. As CEO of Five Star3, LLC, Waugh is the founder of The Rainmaker Academy, The Leadership Academy, The Rainmaker Consulting Group, The Alliance of Professional Associations (APA) and Enterprise Worldwide. APA now represents over 210 firms in 35 countries. He formerly served several of the largest clients of PricewaterhouseCoopers as an audit manager. He became chief executive officer of Advantage Companies, Inc, an SEC registered company. He is a member of the National Speakers Association, the American Institute of CPAs and the Tennessee Society of CPAs.