Deb Mirisch is owner/accountant at Biz Synergy and has been toying with the idea of moving from time-based to fixed-fee payments to improve cash flow.
Having worked as an accountant for a significant part of my career the time-based model was strongly entrenched in me. It was, therefore, a natural progression to use that model when I began Biz Synergy some years ago. It was all I knew. While this seemed to work fine early on, as our team grew I realized something had to change.
Realising that change was required
Some of the things that made me realize that change was needed were:
- WIP and debtor levels were leading to cash flow challenges and a growing overdraft.
- Invoicing was time-consuming and mind-numbing.
- I had less time to do what I love, work with our clients.
- Advances in technology lead to efficiencies which, in a time-based model, would see fees decrease without recognizing the value of the knowledge, expertise and experience that is required to do what we do so well.
What took me so long?
- Fear I’d get it wrong
- Not knowing where to begin
- Overthinking it
- Worrying that I didn’t possess the sales skills to sell the concept.
Making the move to fixed-fee
It’s only just this year that I finally started the move to a fixed-fee model. Actually, let’s get the wording correct – a fixed-fee, value-priced model. They are two very different things. All our new clients now go straight onto this model, while we work our way through converting our existing clients.
I’m certainly not afraid of change and I’d like to think that generally I’m an early adopter. However, in this case I sat on the fence far longer than I should have. I watched what others were doing in the industry, and as we grew our issues also grew until I eventually had no choice but to jump to and deep dive in.
Going on the journey of on-boarding
The journey has also made me take a close look at our onboarding processes. I haven’t jumped into another add-on, but chosen to fine tune this first and test it for a while. We had a huge win early on when an existing client chose to pay a whole year’s fees up front – a $20,000 boost to cash flow. Not only did we manage to convert that client from an arrears billing model to an upfront payment, we also offered them additional options and they chose to uplift on our services – a double win which gave me the confidence that, not only did this work, but I did have the skills required.
I love that this model lends itself to engaging with clients who value what we do. When a prospective client chooses not to engage us, I now take the glass-half-full view that it’s perfectly fine and a whole lot less heartache for all concerned in the long run.
To read more about Mirisch's move on cash flow, visit the Xero Blog.