Financial advisers and accountants are increasingly seeing clients struggle to pay their fees, with a knock-on effect on their cashflow, new research has shown.
A study by finance provider Premium Credit found 87% say more clients are struggling to pay their fees and 74% expect a rise in the number of clients finding it hard to pay fees over the next 12 months.
More than nine out of 10 (91%) say that clients not paying fees on time has been a factor in cashflow worsening, with 27% identifying it as the main factor.
Premium Credit said nearly three quarters (70%) of advisers and accountants are now allowing some clients to pay fees monthly or over an extended period and 68% say they would consider allowing some clients to pay fees monthly or over an extended period. Additionally, 85% would consider using a scheme that enables clients to spread the cost of fees into monthly payments.
A large proportion of those surveyed also said they are seeing increasing financial distress among clients, with 67% estimating that up to 10% of clients’ businesses are on the verge of failing, while half estimate up to 10% of clients’ businesses are in poor health.
Respondents were split over whether HM Revenue and Customs is getting tougher on tax arrears and debts, with 41% agreeing and 46% saying the tax body is becoming more supportive.
However, more than half (52%) say the increased costs will lead to employers cutting staff and recruitment and 41% say they will hit profits. Around 35% worry the increased Employers’ National Insurance and minimum wage will cut jobs in the economy as a whole, while 29% say it will contribute to reduced GDP.
Jennie Hill, chief commercial officer at Premium Credit, said: “Accountants and financial advisers are heavily reliant on clients paying fees and paying them on time so it is inevitable that when clients struggle to pay fees accountants and financial advisers suffer.
“It is, however, clear that accountants and financial advisers are being flexible to support clients who clearly are also suffering. Using schemes which enable clients to spread the cost of fees into convenient monthly payments would help both sides and ensure bills are paid on time removing any risk to cashflow.”
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