Have you ever done a diagnostic/discovery on a client’s needs where they need a Company/Trust to be set up? In this situation, do you place the order with your supplier and send an invoice to the client and wait (pray) for payment?
Someone asked us this question not long ago and decided to share the answer with you as you might find yourself in the same scenario.
If the client does not pay, then you are stuck with the Company/Trust structure until they pay and it will usually take clients several months to pay you.
In our Practice, we always ask the clients to pay upfront. We send out an invoice and unless it was paid, we do not proceed with any work.
We advise the client that the suppliers that we used required the money to be deposited into their bank account before they would proceed.
We never had a problem asking for payment upfront.
The handful who pushed back typically would never have paid us anyway or we would have had to wait for months for payment and they typically were high maintenance in every other area as well.
We charged a fee for setting this up including advice and attending to applying for tax file numbers including stamp duty (if any).
Example:
Cost of Trust: $600
Fee for applying for tax
file number and advice: $500
Total: $1100
GST. $110
Total. $1,210
You want it to be simple, easy, and convenient for the client so I would not ask them to pay the supplier and another fee to you.
Instead, collect the total fee from the client before putting the order in, and then you pay the supplier separately. Make it convenient for the client.
Some make simple things complicated.
It’s always best to see things from the client’s perspective and make complicated things simple for the client.
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