Financial Technology

How Accountants Can Offer Fee Funding (BNPL)

Richard Heffernan
June 23, 2022

While a range of billing options have been used by accounting firms over the years, the rise of Buy Now Pay Later (BNPL) and other types of new fee funding that became popular during the pandemic have now become a standard and expected payment option for consumers.

Traditional billing remains the primary choice for millions of consumers, especially those from older demographic groups and with higher net wealth. But for younger consumers, including those just starting to seek out accountants for financial services, BNPL will be a key factor in choosing which accountant or firm they engage for services.

As many of these consumers may end up using the same accounting firm for the entirety of their adult lives, firms cannot rule out offering fee funding options to those customers and prospects just beginning their professional careers, and the potential long-standing relationships they may develop with their accountant or firm.

The Growing Trend of Alternative Fee Options

As accounting firms and other businesses seek to adapt to the preferences and available options of a new generation of consumers as numerous alternative plans for payment of services have emerged.

Flat Fees are typically a single, all-inclusive charge for a designated and limited amount of work. Often associated with large, “storefront” accounting firms, flat fees are primarily utilized by consumers with smaller incomes and limited assets. Flat fees usually do not include extensive consultation services, and the amount of “face time” between client and accountant is limited, usually to a single meeting. While flat fees are only viable for a small and very specific group of consumers, they can also serve as a valuable “entry point” for clients who’s accounting needs – and accompanying services and fees – will continue to grow over the years.

Hourly Fees are common in many different professions and are based on a “per-hour” rate set by the accountant or firm. Hourly fees include the time spent on planning, consulting with the client, the number of hours spent completing the actual work, and any time required post completion of the designated project. Hourly fees are popular because it’s easy for clients to see the number of hours being billed for the work that’s been completed. One challenge with hourly fees is explaining to clients exactly how many hours are required for a given task, the added costs of unplanned work, and the fact that clients will be charged for items like additional consultation services.

Blended Fees utilize a combination of fee models and are designed to best serve the needs of the client while providing proper compensation for the accountant or firm. Blended fees may include an initial flat fee to cover services like a consultation and the upfront work required for the scope of the project. After the work covered in the flat fee is completed, the accountant may charge an hourly rate or other agreed upon amount for work on any additional or unplanned services. Blended fees provide transparency to the client, as well as ensure that the accountant is adequately compensated for the value of services delivered.

What is BNPL (Buy Now Pay Later)?

BNPL, a type of short-term installment loan, enables customers to purchase products or services while paying for them in installments by a designated future date. Even though BNPL is technically a “credit” service, there are typically no credit checks involved, which can affect an individual’s credit score, and no interest fees associated with making payments over a set amount of time. By establishing a direct relationship with the merchant, the consumer can also avoid using credit cards to cover the cost of the purchase, eliminating the associated fees and interest charges associated with credit cards. The most common BNPL practice is four payments over a set period of time, say three to six months.

What is Driving the Popularity of BNPL?

While BNPL initially gained momentum with online shoppers during the pandemic, the benefits to both consumers and vendors became readily apparent. Consumers get what they want immediately, knowing they can pay for the product or service over a fixed amount of time, all with no interest or penalty.

Merchants benefit by finalizing the purchase of their product or service immediately, even if there’s a short amount of time before the purchase is paid in full. This not only reduces the sales cycle, but it also helps to minimize the amount of marketing and other customer outreach required before a sale is complete. In addition, vendors who offer BNPL are growing the number of younger consumers purchasing their products or services, as well as seeing an increase in the value of services sold. The growing popularity of BNPL is also extending to consumers with greater spending power, which is luring more premium merchants to offer the service.

Why do Accounting Firms Need BNPL?

As payment models evolve, more accountants and firms are providing BNPL as a service to clients. Beyond the benefits listed above, fee funding enables accountants to have their services paid for on a regular time frame based on clearly defined and agreed upon level of work to be completed.

The advantages of the BNPL payment model serve both parties. The client knows exactly how much they will owe with a set number of smaller payments scheduled over an established time frame. This is an increasingly attractive option for consumers in a time of growing economic uncertainty.

Now is the time to explore how BNPL and other client credit solutions can help your accounting business to flourish by offering new payment options that are growing in popularity with a broad range of consumers.

ClientCredit is a BNPL solution built by CPACharge specifically for the accounting industry. Learn more about how ClientCredit re-defines the client-centered experience.