A critical measure for entrepreneurs who offer services and bill either by the hour or a fixed price is the amount they bill clients each month. As anxious as many entrepreneurs are to raise their revenues, their daily activity often sabotages that goal with the same common billing mistakes.
Here's a checklist you can use to check up on your own habits as well as some tips on how to break the bad ones:
Mistake #1: Forgetting to write down or log your time spent
I can’t be the only one who has shorted themselves in this way over the years. The answer is to muster up all the discipline you can and create a routine that you will stick to, no matter what. Create a checklist for yourself when you start on a client’s account and literally write out the steps you need to follow. (Step one, write down the client name, step two write down the clock time, step three, etc.)
The real challenge comes when you go into “fire” mode for a client. This is often when the time recording slips past everyone’s mind, but don’t let it. Go back to your familiar checklist, and take a deep breath.
Another thing to watch out for is distractions. Be conscious about slipping and checking Facebook or Instagram. Stop the clock when that happens so you don’t have to guess about the write-off time.
Mistake #2: Doing tasks as they come into your inbox without batching work by client
I know you want to be responsive and fast for the client, but you’re cheating yourself and the client is getting a freebie. You respond to that email quickly, and you think, that’s not enough time to write down. The problem is, you don’t realize there were 20 emails from that client for the week, which took a total hour. Multiply that by 30 clients, and that’s a lot of time not written down.
Slow down, and group the emails by client, to be answered all at once, using the checklist mentioned in #1.
Mistake #3: Not billing for calls
The information you give on the phone may be your most valuable information you give to the client on the whole project. Why aren’t you billing for it?
This is an easy fix; simply don’t take unscheduled phone calls. All calls need to be scheduled through an assistant, and logged on your bill.
Extra hint: Don’t let the experts in your business answer your phone. They tend to give away too much and lower your sales conversion rates. Instead, train a non-technical receptionist or customer service individual to handle your incoming phone calls.
Mistake #4: Not taking into consideration team time
The more team members that are on the project (whether on your side or the client’s side), the longer the project will take, period. If you’re billing at a fixed fee or preparing an estimate, be sure you add some time to the project based on team size.
A great classic book on this is The Mythical Man-Month. I got my project management experience back when IT mainframe projects took several years and dozens of team members to complete. The essence is that you get diminishing returns for each additional person you add to a project and at some point, you are just making the project go on forever.
Mistake #5: Not billing for setup time or project management time
As a coach, I’ve pointed this out to my clients and let them decide what to do. Somehow, whether in your billable rate already or as additional hours, setup and project management time should be included in the estimate or billing as a part of the project or account.
Mistake #6: Shaving time off the bill to meet your estimate or because you like the client
Who do you *like* better, your client, the child you need to put through college, or your 90-year-old self in avoidance of eating cat food on your fixed income? I believe this is your brain trying to keep you from any short-term argument you might anticipate with the client on billing, but this really doesn’t make any sense when you take a step back and look at it for the long term, does it?
Mistake #7: Guessing without really tracking clock time because you forgot or got interrupted
Discipline. Enough said.
Mistake #8: Doing work outside the scope of a fixed fee job or doing rework and not billing for it
Even before you start the project, teach your client what will happen when they ask for work outside the project. Hotels ask for a credit card for incidentals, and we’re all duly trained. Show your client the change order process and how they will be billed so it’s smooth when (not if) it comes up.
Mistake #9: Prices that are too low to cover costs
This is a huge one because most accountants do not learn how to communicate their value to clients. They take the easy road with lower fees and then wonder why their clients are so cheap. It’s because we’ve trained our clients to see us as low value.
I also see this mistake in the startup year when an employee who has been laid off (and still has an employee mentality) is just starting their own business. They bill like they were paid as an employee. Surprise! It’s such a dramatic change in mindset to realize the enormous risks entrepreneurs make and the costs they have to cover.
If you have seen rising technology and marketing costs but haven’t raised your own rate, you are giving yourself a cut in pay every year. No self-respecting employee would stand for that, and neither should you.
Be sure to do your math, watch your margins, and price accordingly.
Making changes
Be careful with your current, spoiled clients as you implement these changes if you have been materially guilty of any. When their bill goes up, they are likely to notice and grumble a bit, so you’ll need to figure out what you’re going to tell them.
As you get new clients, you can *train* them right from the beginning, so they have accurate expectations of what their account will cost them on a monthly basis.
I hope your billings go up after you implement these tips; let me know which tip you like best.
Sandi Leyva
Author Bio: Sandi Leyva, CPA, CMA, MBA, and founder of Accountant’s Accelerator, has helped thousands of tax and accounting professionals earn more, work less, and serve their clients better through her innovative marketing, training, and coaching services. Author of 30 books and hundreds of CPE courses, Sandi has won 12 awards for her thought leadership. Visit her at accountantsaccelerator.com and acceleratorwebsites.com.