Accounting Industry Billing Models

Chapter 2 discusses the billing models of the accounting industry and the changes that have emerged since Xero broke into the market. Many accounting practices are now offering their clients fixed-price agreements, which is when a client is charged their annual accounting fee in 12 monthly installments rather than in one lump sum. This smooths the cash flow for the client, as well as the accountant. It also means accountants do not need to run a large debtor balance of clients who owe them money. Fixed-price agreements are the buzz of the industry, but they are commonly misunderstood. There are three methods of billing fixed-price agreements: in-advance, in period and contract-period. Each method describes whether an accounting fee is billed in advance before the work is done, in the period that the work is done, or based on when the contract was signed. The three methods all have major implications on how jobs are set up, scheduled and billed, and how risk is managed.