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Where Does Recurring Billing Have the Biggest Potential Impact?


by Claire Scott, QuickFee


When your clients get regular services, placing them on a recurring payment schedule just makes sense. It adds convenience for them and predictability for your team.

Although many CPA firms want to offer recurring payments, it does take some forethought to see lasting success with this model. In addition to accepting digital payments, you’ll need the right processes and infrastructure to support your new recurring option.

Let’s look at areas where recurring billing can impact your firm – and how you can make the most of this method.


Impact #1: Increased client retention.

Recurring payments allow clients to put the payment process on autopilot. This often leads to less friction in the relationship. For new prospects, a recurring option can also make the service cost more manageable, cutting down on “sticker shock” during sales.

While recurring options do not guarantee that a client will continue to work with your firm, evidence does suggest that this model leads to stickier relationships. One 2021 survey of 2,500 U.S. consumers on subscription spending showed that most people are unaware of how much they spend on recurring payments. Yet they still describe themselves as “happily hooked” on their services. How do you apply this finding in the CPA space? You can use a recurring option to keep your clients engaged – when it’s combined with regular client touchpoints and cross-selling opportunities. Since businesses can boost profitability by 75% with just a 5% increase in retention, recurring payments represent a tiny lift for a large potential return.


Of course, not everyone is the right candidate for recurring payments. Some examples of clients who benefit most:

  • Clients getting predictable tax, bookkeeping, or consulting services 

  • Chronic late payers who are still in good standing with your firm

  • Clients who don’t qualify for long-term financing but need more flexibility

Impact #2: Improved cash flow and forecasting. 

It takes 30 to 60 days for most CPAs to receive payment. If your firm offers management or business consulting services, you can expect the highest days sales outstanding (DSO) of any industry, at up to 125 accounts receivable days. 

Cash flow can become a constant battle when client checks take this long in the mail (especially when your work-in-progress pile keeps growing.) The average DSO for CPAs may always be slightly longer than in other industries because of the range and complexity of accounting deliverables. With recurring billing, however, you can keep your receivables in check.  

Your receivables will improve over time with recurring online payments, regular invoice reminders, and consistent client outreach. Monthly payment schedules also allow clients to plan their finances, so there will be fewer errors and bounced checks.

Improving cash flow will also empower your firm’s staff to invest in other vital areas, such as:

  • Technology

  • Staffing and recruitment

  • Branding and marketing

  • Employee mentoring and training options

  • New strategic service lines

  • Succession planning

Impact #3: Higher employee retention and satisfaction. 

Recurring billing doesn’t only support your client relationships and immediate revenue goals. It also keeps your talent focused on growth, leading to long-term job satisfaction.  Retention is top-of-mind for many CPA firms right now. CPA exam candidate numbers are at historic lows, and over 75% of CPAs may retire within the next 10-15 years, which could mean staffing shortages. This demographic shift makes it more critical than ever to provide new CPA talent with career-building opportunities and allow them to expand into advisory and niche services.

Every minute your team spends on payment collection, there will be less time to spare on career growth and profit-generating services. In our 2021 survey of professional service firms, respondents shared that staff spend about 1-5 hours each week just collecting payments. For larger firms, that can mean hundreds of hours wasted on repetitive, frustrating work each year.

With monthly automated payments, your firm will have the chance to upsell and provide deeper insights for their clients. As you build your advisory practice, it’s worth asking how you can automate manual processes to give staff more breathing room and career opportunities. 

The Next Step: Transitioning Away from the Billable Hour 

While not every service will work with a regular payment schedule, you can deploy more recurring billing options at your firm by shifting away from the billable hour in certain areas. Although billable hours are standard practice in accounting, this pricing strategy does have drawbacks.

For one, it contributes to high DSO by making it harder for clients to understand your true value upfront. For another: This pricing strategy can cause conflicts between partners and staff, usually over the difference between billable hours and realization.

Realization is the most common way to measure profitability at CPA firms. You can calculate this metric by dividing the total billable hours invoiced by the final amount charged. (For example, if a staff member charges $150 an hour and spends 4 hours on one project, the realization rate would only hit 100% if the client was charged $600 at the project’s end.) 

Staff members are usually evaluated by their billable hours – not by the realization rates that matter most to partners. With most large firms averaging 85% realization, staff members face considerable pressure to either under-report or over-report their hours, depending on which metric they need to meet.

Using fixed fees or “bundling” for routine services can alleviate this problem. It also gives the client greater transparency and insight into the cost of their project. From there, it’s a simple step to set them on a recurring, automated payment schedule for those services. 

Optimizing Your Payments with Recurring Options 

Recurring billing is a simple way to smooth your cash flow, improve job satisfaction, and retain clients. When used strategically, this payment option gives you a lot of return for your investment. It can also change how staff and partners approach core services – and shift how clients perceive your value. 

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