A business contract can take several different pricing forms, from time and materials, firm-fixed-price and even cost-plus-incentive-fee. There are so many different options to choose from, but in this article, we'll go over the advantages of fixed-fee contracts for accounting and other professional services.
Retailers and customers enter into fixed-price contracts for one main reason: stability. In a fixed-fee contract, a client can rest assured they're paying a set-price for products and services, with no surprises. A contractor can also presume a fixed-fee payment for completing a project. At the end of the day, a fixed-fee contract keeps everyone happy.
Below we’ll take a look over the advantages of going fixed-price for ongoing contracts and why you should certainly consider this type of agreement for your next project.
1. Predictability & Simplicity
Up first is, of course, predictability. If you're entering into any kind of fixed-fee business agreement you can rest assured you'll always be paying the same amount each billing cycle - give or take a few unforeseen modifications. Whether it's an ongoing fixed-fee accounting job, design project or anything else, you'll always be billed exactly what you expected. That provides you with greater control of your finances and gives you time to prepare and budget for the bill.
Over the long term, this fixed-fee predictability may actually allow your businesses to save money. You can move aside left-over savings into bank accounts or reinvest into your business without wondering, 'Will I have a bigger accounting bill this cycle?'
Fixed-fee contracts typically don't require much management either. You can simply foster an ongoing relationship with your an accountant, designer or copywriter and not have to worry about adjusting fees. It simply runs like clockwork.
That means going about your day-to-day tasks and growing your client base can be priority number one. There's no need to spend any time at all micromanaging your fixed-fee contracts.
2. Stability Makes Them Easier to Pay
Generally, fixed-fee accounting or professional service contracts are set in stone, whereas hourly contracts are not. In some instances, you could be slugged an extra few hundred dollars because of the additional hours it took for your contractor to complete a project. On a fixed-fee contract, this doesn't happen.
It’s no secret that fixed-fee contracts can cost five to ten per cent more than hourly contracts. Though, when you factor in the size of a project, a fixed-fee works out to be a whole lot cheaper.
That brings us to the biggest perk of fixed-fee contracts: the ability to pay.
You’ll have the comfort of knowing exactly which bill is coming up soon and you can be ready to pay it right away. Ergo, no damage to your business’s saving accounts, no bill-shock and certainly no missed payments. It’s the stability we all crave in the business world.
3. Solid Requirements Reduce Disagreements
Arguably the biggest advantage of a fixed-fee project is its ability to greatly reduce stress for all parties. Client's know the expected result and contractors have the financial assurance they need to get the job done. There are no unexpected costs for clients, no slowdowns and no reason to crush the entire workload into an hourly limit.
At the end of the day, a fixed-fee accounting, design or construction contracts are something that businesses favour thanks to the predictability and stability of them. These are the types of perks that not many other contract types can offer.
How to Set Up a Fixed-Fee Contract
The process of setting up a fixed-fee accounting contract or any other type of contract isn’t too difficult. You’ll first need to provide all of the necessary project information to your contractor. This way they can discuss with you about what you’d like to have done on a recurring basis. With this information, your contractor will be able to work out a fixed-fee arrangement that meets your project requirements as well as their rate.
An important point to remember is that you should always be as upfront and direct as possible because any changes to the fixed-fee contract’s workload will result in an increase in the bill - as the contractor wasn't told about this extra work.
If you want a truly predictable, fixed-fee contract then the workload needs to be fixed too. It might be a good idea to create a project plan to get all of your requirements out in the open.
Fixed-Fee Quarterly Accounting at Money Monarch
If you’re interested in a quarterly fixed-fee accounting contract with Money Monarch then simply get in touch. Our accountant will be happy to go over your requirements and offer a competitively priced fixed-fee ongoing contract.
You can find more information on our fixed-fee accounting services here.