In the long list of day-to-day administrative tasks that tax firms face, billing and collections sit near the top in terms of the amount of time devoted to them. While the established methods of manual invoicing, chasing overdue payments, and handling client queries may get the job done, what are these methods costing your tax firm in terms of efficiency?
With automation improving tax firm performance in any number of operational areas, we’re going to look at how automated billing software can remove the major administrative burdens of billing and collections from your tax practice’s workflow, and how platforms like Harness can help streamline your operations.
Table of Contents
- The pain points of traditional billing for tax advisors
- Understanding the power of automated billing software
- What are the key features to look for in automated billing software?
- How Harness helps tax advisors improve their billing and collections
Key takeaways
- Automation directly addresses common challenges like use of time, human error, lack of transparency for clients, and scalability limitations, transforming these burdens into streamlined processes.
- Beyond efficiency, automated solutions significantly improve cash flow by allowing prompt invoice delivery, offering diverse payment options, and implementing proactive, automated payment reminders.
- A professional, accurate, and convenient billing process, often facilitated by client portals, builds stronger client relationships and improves overall satisfaction.
- Offloading administrative tasks and providing financial insights through comprehensive reporting, automated billing software frees up tax advisors to focus on high-value client work.
The pain points of traditional billing for tax advisors
Everyone needs to get paid. The traditional processes by which tax firms achieve that, however, are fraught with problems—issues that have long been considered simply par for the course.
Time drain
Manually preparing invoices, calculating hours, and applying different rates consumes a disproportionate amount of staff time. This is time pulled away from more important tasks that tax professionals should be pursuing.
Accuracy issues
Human error is inevitable in the manual billing process. Miscalculations, forgotten expenses, or incorrect client details can lead to disputes, delays in payment, and damage to your professional image.
Slow collections and cash flow issues
Chasing late payments through phone calls and emails can be uncomfortable as it is tedious. This manual dunning process leads to extended Days Sales Outstanding (DSO), limiting your tax firm’s cash flow and your ability to invest in its growth.
Lack of transparency
Clients often lack a clear understanding of their bills, leading to frequent queries and back-and-forth communication. This can strain client relationships and add to your administrative overhead.
Scalability challenges
As your firm grows, manual processes simply can’t keep up. Adding more clients means adding more administrative staff, which eats into your profit margins and your ability to scale efficiently.
Billing consistency
Automated software consistently applies predefined billing rules, rates, and tax jurisdictions for every invoice. This uniformity prevents discrepancies that could arise from various team members interpreting rules differently or making one-off mistakes.
Understanding the power of automated billing software
The most immediate and apparent benefit of billing software is the major reduction in time spent on administrative tasks. Some of the most important factors within this include:
Automatic invoice generation: Based on predefined templates, hourly rates, project scopes, or recurring service agreements, invoices can be generated with a few clicks or even fully automatically.
Time and expense tracking: Many billing solutions integrate with time tracking tools, allowing for the smooth conversion of billable hours and expenses into invoices, reducing errors and saving countless hours.
Streamlined payment processing: Automated billing systems integrate with various payment gateways to offer clients multiple convenient payment options, speeding up the payment cycle.
Automated reminders and dunning: removing manual follow-ups from the billing process, billing software can automatically send polite payment reminders and escalate dunning notices based on predefined schedules.
Improved accuracy
Automated billing software delivers invoices that are free of commonplace and frustrating slip-ups that can eat away at your time and reputation. Tax advisors no longer need to worry themselves about miscalculated hours, incorrect rates, or forgotten taxes. More than just delivering correct numbers, this kind of accuracy leads to fewer client disputes and, importantly, faster payments.
With automated billing solutions designed to manage complex tax rules, these platforms also keep your firm compliant and help avoid often costly mistakes.
Accelerated cash flow
Cash flow is an issue for most tax firms, and a particular concern to smaller ones. Automated billing software improves cash flow in a number of ways.
Prompt invoice delivery: Invoices are sent out immediately upon completion of services or at predefined intervals, rather than waiting for manual processing.
Easier payment options: Offering a variety of payment methods (credit card, ACH, direct debit) makes it simpler for clients to pay quickly.
Proactive reminders: Automated reminders significantly reduce late payments, helping to maintain a steady stream of incoming funds.
Real-time visibility: Dashboards provide instant insights into outstanding invoices, payment statuses, and collection trends, allowing for proactive financial management.
Improved client experience
While no one likes paying bills, when the process is smooth and transparent, it’s far less of an issue. Clients appreciate invoices that are not just accurate, but clear and easy to understand. This transparency builds trust and reduces time-consuming communications about bill clarification.
Self-service client portals add an additional layer of convenience. These secure, user-friendly hubs allow clients to log in at any time to view invoices, review payment history, and make secure payments. This drastically reduces direct communication with your team for routine queries, and adds a distinct air of professionalism to your tax firm’s operations.
Scalability and growth
For tax firms that are keen to expand, automated billing software allows you to handle increased client volume and process more invoices without needing to proportionally grow your administrative team. In addition to this, the real-time financial data and detailed reports that billing platforms offer allow tax firms to make data-driven decisions that help move your practice forward more reliably.
What are the key features to look for in automated billing software?
There are a wide number of options when it comes to automated billing software. Some of the more popular platforms that tax firms use include:
Xero: A cloud-based accounting platform with a strong focus on automation and integrations.
QuickBooks: Another popular cloud-based choice, known for its user-friendly interface and extensive integrations with various tax preparation platforms.
FreshBooks: Often favored by small businesses, the platform offers features like time tracking, automatic invoicing, and expense management, with a focus on ease of use.
Zoho Books: Part of the Zoho suite of business tools, Zoho Books offers a comprehensive accounting solution with features like automated invoicing, bank reconciliation, and inventory management.
There are, of course, numerous other options available. Whatever platform you consider, however, needs to have the following features:
Automated invoice generation: Customizable templates, recurring billing options, and integration with time tracking.
Multiple payment options: Support for various payment methods (credit cards, ACH, bank transfers) and secure payment processing.
Automated reminders: Configurable reminder schedules and escalation workflows for overdue payments.
Reporting and analytics: Dashboards and reports on cash flow, DSO, payment trends, and client payment behavior.
Integration capabilities: Smooth integration with your existing accounting software, CRM, and tax preparation tools.
Customization: the ability to tailor invoices, reminders, and workflows to your firm’s specific needs and branding.
Security and compliance: Data encryption, PCI compliance, and adherence to relevant financial regulations.
How Harness helps tax advisors improve their billing and collections
At Harness, we offer both technological and human-based resources that help tax firms manage their billing processes more efficiently. Our client portal reduces the need for continuous administrative communication with clients by offering personalized open item lists, automated reminders, and easy access for billing management.
In addition to this, our dedicated concierge service allows tax firms to offload any number of administrative tasks, including billing and reminders. Providing the advanced software and dependable human support that tax firms need to operate efficiently, Harness helps create operational environments that spur tax firm growth.
Get started with Harness and sidestep the day-to-day administrative tasks that may be weighing down your tax firm.
Disclaimer:
Tax-related products and services provided through Harness Tax LLC. Harness Tax LLC is affiliated with Harness Wealth Advisers LLC, collectively referred to as “Harness Wealth”. Harness Wealth Advisers LLC is a paid promoter, internet registered investment adviser. Registration does not imply a certain level of skill or training. This article should not be considered tax or legal advice and is provided for informational purposes only. Please consult a tax and/or legal professional for advice specific to your individual circumstances. This article is a product of Harness Tax LLC.
Content was prepared by a third-party provider and not the adviser. Content should not be regarded as a complete analysis of the subjects discussed. Although we believe the content is reliable, it is not guaranteed as to accuracy and does not purport to be complete nor is it intended to be the primary basis for financial or tax decisions.