Smaller professional services firms are increasingly ditching their billable hours approach to invoicing, in recognition of the nasty surprises and cash flow constraints this heaps on their clients.
Gold Coast-based accounting firm Oculus Group announced that after 70 years in operation, billing on hours was phased out from July this year in favour of upfront quotes, in what they were billing as a “no surprises here” approach to invoicing their clients.
“Clients like that we provide quotes for work upfront so that there is certainty about the services they are receiving and the price they are paying”, practice manager Tim O’Hara said.
“We simply want to help people without the element of surprise.
“By removing time sheets, we believe our clients will happily give us a call when there is an event that affects their financial lives instead of being reluctant due to unknown costs.”
Interestingly, as well as the benefits for clients, Mr O’Hara noted the firm itself has already seen a noticeable improvement in productivity as a direct result.
“We were spending 10 per cent or more of our time on completing our time sheets, reviewing the time, creating time-based bills and chasing debtors”, he said.
Another firm to have taken a similar approach is Sydney law firm Progressive Legal.
“The biggest problem start-ups and small business[es] face is cash flow. We designed packages that serviced SMEs based on what their needs, cross-referenced against their means,” founder Ian Aldridge, who previously worked in large multinational firms overseas, told My Business’ sister publication Lawyers Weekly.
“We front-load the retainer so they get the protection they need now, instead of when they can afford to pay for it, i.e. instead of the old approach of doing things really piecemeal and reactionary.”
Mr Aldridge added: “The ‘come-here, go-away, [here’s your bill]’ establishment approach simply cannot service our client base as the overheads associated with doing business are cost-prohibitive and the unrelenting pressure on lawyers to produce billable hours disincentivises practitioners to spend extra time with clients.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.