Wednesday, April 1, 2009

How to grow the business while your write-up clients go "Past-90"

As the miracle of April 15th draws near, and many of my friends who are working on personal income taxes take a deep breath and collapse under their desks in a fetal position... The W2 revenue is in... the Income Tax revenue is in... now what? The time has arrived (after a long weekend?) to think about expanding (or creating) your payroll business.

It's a long time until January 2010.

Why now? Why expand?!? Umm, Logan - did you notice that the economy is now one of the pillars of chaos theory, that our elected officials keep smiling and writing checks - hoping it was all just a bad dream, that our customers can't seem to keep up on their bills - ours included!

Well, there is nothing worse than a bloated Accounts Receivable with no hope of collecting. That is why now is the perfect time to expand your payroll operation.

You see, here is the secret:
In payroll, you take your payment when you process the client's ACH transactions.

Paid with the employees = No AR = Money In The Bank

Remember, when a client lays off part of their staff, your invoice for their payroll is barely reduced. Just a little bit off the top for that handful of checks, not the base fee.

One of my clients in particular who I may have written about in the past brought up the fact that his growing Accounting practice was not making money while meeting all of its goals.

This stinks!

There is nothing like drowning in success (and I don't mean in a swimming pool full of champagne and hundred dollar bills). His words to me went something like this,

"Logan, after tax season I am jumping into payroll full time and letting go of this practice as soon as possible. I just can't deal with the fact that a successful practice, meeting all of its growth goals can to not make anywhere near the projected income in the plan. My client list is growing, but so is the list of clients who are behind on, or just aren't paying their bills."

Moral of the story:

  • If you aren't taking your payment with the payroll, start.
  • If you are starting a new payroll operation, make sure that this is your standard practice and is contained within your Payroll Service Agreement.
  • If you don't have a Payroll Service Agreement with your clients - write one. If you don't know what to put in it, give me a call.
Bottom line - Payroll is a great way to off-set the losses you may be incurring as clients find it harder to pay you. Do it right, and it may become your primary profit center.


  1. Great post for accountants who want to start adding payroll as a way to provide steady income every week. I have built my practice around this very idea. I'd rather have a small payroll income source from many clients that is steady work, week-in and week-out, than big clients who slow pay. I have a system which I have been perfecting which is built around superior service, that's the key, tailor the deliverable to exactly what the payroll client wants. You will beat the competitors who try to force all clients into the same model. Payroll can be a profitable line if done right.

  2. Logan: Glenn from MyMarketingPartner ( are you? great article. Are you heading to the payroll group meeting in Tampa next year?

    Enjoy the holidays.


  3. Glenn - Doing great Glenn, yourself? I should be there.