Half of accountant firms facing cashflow issues over client fees
Half of accountancy firms say their cashflow has deteriorated over the past 12 months as clients struggle to pay professional fees, new research from Premium Credit, a leading provider of finance, shows.
The study found one in six (16%) say cashflow has deteriorated dramatically while 34% say it has weakened slightly with 86% saying problems with collecting client fees is the main or a contributory factor.
Nearly two out of five (38%) said clients struggling to pay fees was the main reason while 48% say it is a contributory factor. Just one in seven (14%) say clients struggling to pay fees is not a factor in cashflow issues.
In terms of how accountants feel about their future cashflow, around 32% say they expect it to improve but two out of five (40%) worry it will deteriorate while 28% expect it to remain stable.
The issue about clients struggling to pay fees is not going away – around 78% say they have seen more clients struggling to pay fees, and 76% expect to this trend to continue over the next 12 months.
Premium Credit’s Fee Plan, which is free to use for accountancy firms, enables clients to spread the payment of invoices over a number of months up to a year for a competitive interest rate. Accountancy firms using the service gain exclusive access to Premium Credit’s practice tax funding service enabling them to spread the cost of tax bills.
Jennie Hill, chief commercial officer, Premium Credit (Specialist Lending) said: “Cashflow problems are a major issue for accountancy firms with the collection of professional fees a major contributory factor.
“While there are some signs of optimism it makes sense for accountant where possible to encourage clients to use payment plans which have the added advantage of benefiting both the accountant and the client in terms of helping them to spread the cost of their fees.”