Magazine article The CPA Journal

Billings Discipline Builds Good Business

Magazine article The CPA Journal

Billings Discipline Builds Good Business

Article excerpt

practice advice

Some services, such as bankruptcy workouts, pose special problems in collecting fees for services. This serious matter can have very costly results when a firm has spent a great deal of money providing competent, professional advice only to find it difficult to be paid for the work on a timely basis, if at all.

The bankruptcy administrator or other trustee must be careful to make sure all payouts are legitimate, while holding down costs because of the limited cash available. Compounding this problem, professional firms are often hired on short notice and work under severe time pressures. This can lead to poorly worded contracts, misunderstandings about the scope of the work, and inadequate or sloppy recordkeeping.

Protection Against Nonpayment

While it is easy to understand why firms sign on for lucrative bankruptcy work, it is foolish to do so without protecting the firm. The following steps can help a firm carry out an assignment to the satisfaction of the client and make it more likely to receive prompt and full payment:

* Make sure there is an engagement letter for the project, even if it is necessary to prepare it for the client. If working in an official capacity, ensure that court approval is obtained at the earliest possible stage of the engagement.

* To enhance the probability of full payment, submit a proposed budget for the project, describing as clearly as possible the areas to be examined and how such reviews add value. If this cannot be done in the initial stages, make sure the client at least understands the billing arrangement and is aware of billing rates. If associates or clerical staff are to be used, make this known, and provide a separate rate for their services. Again, if working in an official capacity for the court, know the administrative rules for professional work issued in that particular court.

* If not prohibited by the trustee, request an up-front retainer that will be applied to the final invoice. Guard against unpaid invoices that exceed the retainer by a significant amount.

* After work begins, conduct regular meetings with the client as the project progresses. This will ensure that everything stays on track and will give the client confidence in the firm's business acumen, as well as a feel for how much time is being spent on the assignment. …

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