Billing the Right Client

So you have done the client’s work, there is a dispute and they aren’t paying. Now what? If you have a signed Engagement Letter in place which complies with APES 305 Terms of Engagement guidelines then you are at least in a better position to chase payment through a legal process. That is, if your Engagement Letter is with the correct legal entity.

We regularly act for a number of accounting firms, particularly in recovering unpaid accounts from their clients.

The two most common issues our clients face in this process are:

(a) not having a signed engagement letter or services agreement with the client; and

(b) failing to issue invoices to the proper entity.

In many cases you will have a client who has a number of companies or trusts and you bill that person or one of their entities for all of the work. If you do this make sure you have an engagement letter or services agreement with the entity or person you bill that specifies that it covers the work done for their associated entities. Some accountants do not like to send engagement letters or services agreements because it is a hassle to follow up the client to sign them. This can be overcome by inserting a clause in your agreement that specifies that the agreement operates when the client gives you instructions to act, after receiving the agreement, even if they do not sign it.

When it comes to putting the right name on a bill the most common issues are:

• forgetting to put “Ltd” or “Pty Ltd” on the end of a company name;
• putting the name of a trust as the party receiving the account, when you should specify the trustee “as trustee for” and then specify the name of the trust.

These simple solutions could end up saving you time and money when it comes to recovery from your debtor.

Leath Nicholson

Director – Nicholson Ryan Lawyers