Collecting Your ReceivablesCollecting Your Receivables

Frank, Frank Goldstein & Nager PCFrank, Frank Goldstein & Nager PC1430 Broadway, Suite 1615, New York, NY 100181430 Broadway, Suite 1615, New York, NY 10018

Tel. (212) 686-0100/Fax. (212) 686-6726Tel. (212) 686-0100/Fax. (212) 686-6726www.ffgnesqs.comwww.ffgnesqs.com

ClaimsClaims

► Insurance carriers aggressively Insurance carriers aggressively dissuade policyholders from filing suit dissuade policyholders from filing suit to recover fees.to recover fees.

►All balances should not be turned over All balances should not be turned over for collections.for collections.

►Read insurance policy’s exclusions Read insurance policy’s exclusions clause regarding suit for fees. clause regarding suit for fees.

Realization RateRealization Rate

Realization Rates should be Realization Rates should be approximately 90 to 95 percent.approximately 90 to 95 percent.

How can I increase my How can I increase my realization rate, collect my realization rate, collect my receivables, yet not violate my receivables, yet not violate my insurance carrier’s policies?insurance carrier’s policies?

Review your Review your risk risk assessment assessment policies.policies.

Review client Review client selection selection policies.policies.

Review your Review your engagement engagement letter.letter.

Screen your Screen your clients before clients before you agree to you agree to work for them.work for them.

High Risk Clients• Unsavory clients• Clients with Financial problems• Clients with poor internal controls• Clients with lack of stability• Clients with uncertain futures• Client which frequently change or sue accountants • Clients who are shopping for an accountant • Clients involved in substantial litigation• Clients engaged in Material related-party transactions.• Clients who require expertise not possessed by the firm• Clients that are unable or unwilling to pay fair prices • Client engagements that totally “feel wrong”

Engagement LetterEngagement Letter A solid engagement letter is essential. Do not proceed without A solid engagement letter is essential. Do not proceed without

the signed retainer and signed agreement.the signed retainer and signed agreement.

Should include:Should include: Usual statementsUsual statements FeesFees Work being performedWork being performed LimitationsLimitations Resolution of DisputesResolution of Disputes Reservation of your right to withdraw or terminate the Reservation of your right to withdraw or terminate the

engagementengagement Special clauses which help protect youSpecial clauses which help protect you

Specific Fee Issues

Disclose in the engagement letter that your firm’s fees are subject to change and client will be notified in writing when rates are adjusted.

Disclose in writing prior to adjusting rates and before doing further work.

Fee Disputes Fee Disputes and and

Non-Payment Non-Payment

Always Anticipate a Dispute

Include clauses for past due accounts

“Invoices will be presented monthly and are due on presentation. Invoices for which payment is not received within 30 days of invoice date shall accrue interest at the rate of 1.5 percent (or the highest rate allowable by law) per month. We reserve the right to halt further services until payment is received on past due invoices. If we should be requested to issue a report, we require that we be paid in full prior to such issuance for all work performed to date (or for all work to date and the estimated time and expenses through such report).”

Include Clause Regarding Fee Disputes “In the event that you disagree with or question any amount

due under an invoice, you agree that you shall communicate such disagreement to us in writing within thirty (30) days of the invoice date. Any claim not made within that period shall be deemed waived.”

“In the event that collection procedures are required, you agree to pay all expenses of collection and all attorneys' fees and costs actually incurred by our firm in connection with such collection, whether or not suit is filed thereon. If litigation is required regarding collection of the account we will be paid our hourly rates for all time actually expended by our firm in connection with such action.”

Include a provision limiting your firm’s liability.

“You agree to indemnify and hold our firm, its partners, and employees harmless from any and all liabilities, costs and expenses relating to this engagement, and expenses (and those of our legal counsel) incurred by reason of any action taken or committed to be taken by us in good faith. In no event will our firm be liable for incidental or consequential damages even if we have been advised of the possibility of such damages.”

You may consider an Alternative You may consider an Alternative Dispute Resolution clause. Obtain Dispute Resolution clause. Obtain carrier’s written permission to include carrier’s written permission to include in your engagement letter.in your engagement letter.

You may also consider a clause on the You may also consider a clause on the Accountant as a witnessAccountant as a witness– Time and work required deemed part of Time and work required deemed part of

original engagement and fee entitlement.original engagement and fee entitlement.

CLIENT REJECTION

Do it in writing

Include warning that advice given during client intake interview should not be relied upon as it was offered without investigation of underlying facts and documentation.

Collecting Your Receivables

Before a CPA firm considers suing for unpaid fees they must analyze the claim. What services were performed for the

client? What is the likelihood of a counterclaim

being made and possibly sustained?

Carrier Policies

Some insurance carriers require you consult with them first before contemplating sending a claim to collections or suing.

Follow carrier’s policies so as to not jeopardize your malpractice coverage.

Our Clients: Accounting Professionals

We• Handle the claims on a contingency fee

• Investigate the collectability of the claim

• Check debtor’s corporate composition, assets, liens, judgments, bankruptcies and litigation debtor is involved in.

• Check invoices, retainer agreement, copies of checks in support of claim for accuracy.

• Make oral and written demands on debtor based on the findings of our investigation.

Collection ProcessCollection Process

Debtor will either make payment Debtor will either make payment arrangements, dispute or ignorearrangements, dispute or ignore

Ask for disputes in writingAsk for disputes in writing

We submit debtor’s dispute to client with We submit debtor’s dispute to client with our recommendationsour recommendations– Suit or no suit- based on severity of Suit or no suit- based on severity of

allegationsallegations– Client’s decision to sue or write offClient’s decision to sue or write off

Legal ProcessLegal Process

Suit is recommendedSuit is recommended Costs received – Summons and Complaint Costs received – Summons and Complaint

prepared and filed with Courtprepared and filed with Court Defendant served with papers.Defendant served with papers. If answer filed by defendant, discovery If answer filed by defendant, discovery

period begins and we await trial dateperiod begins and we await trial date If counterclaim, carrier may require they If counterclaim, carrier may require they

handle the defense.handle the defense. If no answer, we petition the Court for If no answer, we petition the Court for

entry of default judgment.entry of default judgment.

Judgment –ultimately enteredJudgment –ultimately entered Post Judgment CollectionsPost Judgment Collections

Property or income executionProperty or income execution Bank subpoenas with restraining notices Bank subpoenas with restraining notices

to freeze bank accountsto freeze bank accounts Sell commercial propertySell commercial property Restrain monies due from third-partiesRestrain monies due from third-parties

Information in your client’s financials are Information in your client’s financials are essential in collecting your money.essential in collecting your money. Banking informationBanking information ClientsClients AssetsAssets Place of Business and locationsPlace of Business and locations

How can I increase my realization rate, How can I increase my realization rate, collect my receivables and not violate collect my receivables and not violate my insurance carrier’s policies?my insurance carrier’s policies?

Tighten risk management and assessment Tighten risk management and assessment policiespolicies

Make sure to secure engagement letters Make sure to secure engagement letters containing policies regarding payment of feescontaining policies regarding payment of fees

Act timely and diligently to collect past due Act timely and diligently to collect past due balancesbalances

Review work papers and files for any possibility Review work papers and files for any possibility of counterclaims before proceeding with of counterclaims before proceeding with external collectionsexternal collections

Consult with your carrier regarding the claim.Consult with your carrier regarding the claim.

To learn more contact:To learn more contact:

Frank, Frank Goldstein & Nager PCFrank, Frank Goldstein & Nager PC

1430 Broadway, Suite 1615, New York, New York 1430 Broadway, Suite 1615, New York, New York 1001810018

Tel (212) 686-0100 Fax (212) 686-6726Tel (212) 686-0100 Fax (212) 686-6726WWW.FFGNESQS.COMWWW.FFGNESQS.COM