Collections Tip: Discounts Sometimes Work

CPA firms who chase after collections know that it is sometimes a losing game. Each firm tries to collect any outstanding balances due for obvious reasons, but doing so may be very difficult.

One suggestion is to provide a 'discount' if the client were to pay within a specified time period. For example, if you have a client that is 90 days overdue, offer five to 10 percent discount if the client pays within a 10 or 15 day period.

While this isn't the perfect scenario, it might ensure you collect on at least most of your invoice, and any fees you would have paid to collection agencies would far outweigh the cost of the discount.

If collections continue to be a problem with a client, you should question why you continue to do business with that particular client. Cut your losses, and move on to greener and more lucrative pastures.


Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Nov 24This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 9Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.