By Alfredo Garza
For years, many accounting firms organized billing and collections around familiar deadlines. Tax work created natural points in the year when teams finished engagements, sent invoices, and pushed to collect. But that rhythm is changing as firms build more recurring advisory work and the profession experiences continued M&A and outside investment activity.
INSIDE Public Accounting reported that 35 firms from the prior year’s IPA 500 were acquired before the 2026 rankings, while the AICPA’s 2025 MAP Survey found continued growth in client accounting advisory revenue. As more revenue comes from work delivered throughout the year, firms need billing and collections processes that work consistently.
Why DSO Deserves a Closer Look
Days sales outstanding, or DSO, can tell leaders a great deal about whether those processes are working, but it’s important not to treat DSO as a single firmwide number. A firm may collect tax work in one time frame, advisory work in another, and audit work in another. Looking at DSO by service line can show where billing or collections may need attention.
Leaders should also pay close attention to work in progress. A job can be finished and sit for weeks awaiting review or approval before an invoice reaches the client. That delay will not immediately show up in DSO because the client has not technically been billed, but the effect on cash flow is the same.
If work has been sitting in WIP for more than 60 days, leaders should ask what happened between completing the work and sending the invoice. An approval step, partner review, or another process issue may be slowing the firm down.
These delays help explain why two firms with similar revenue can have very different financial profiles. If one consistently turns completed work into cash while another carries large balances for months, the second firm has less flexibility to hire, add service lines, or make other investments.
Delayed billing can also make collection more difficult. When an invoice arrives months after the work was performed, the firm may find itself explaining not only why payment is due, but what value was delivered several months earlier. The longer that gap becomes, the more difficult the conversation can be.
Collections Problems Often Start Before the Invoice
Collections problems often begin with the engagement itself. Payment expectations should be addressed in the engagement letter, including when invoices are due and what happens when an account becomes delinquent.
I have seen firms working with clients that have several related entities establish a policy under which work may pause across the relationship if one entity passes an agreed-upon payment threshold. Other firms have started collecting fees upfront. The right model will vary, but clients should understand the expectations before work begins rather than learning about them after an invoice is issued.
Internal consistency matters just as much as client expectations. At many firms, the relationship partner has traditionally played a large role in billing and collections because that partner owns the client relationship. As a result, practices can vary significantly from one partner to another.
Leaders should therefore consider examining DSO and aging by partner rather than relying solely on a firmwide average. That data can also help identify client relationships that require an unreasonable amount of time and effort to collect from, particularly when that effort outweighs the value of the relationship.
Automation can help firms apply their collection practices more consistently without replacing the human side of the client relationship. Recurring invoices, reminders, and follow-up notices are all areas where firms can reduce manual work. At the same time, there are points when a person should make the call, send the note, or have the conversation, especially when the relationship is sensitive or the circumstances are unusual.
Where Firms Should Look First
Consistent billing is particularly important for advisory services, which can include bookkeeping, financial guidance, and other ongoing work whose value is delivered over time. Firms should make it easy for clients to understand what they received and why it mattered by connecting each invoice to the work performed and the value delivered.
For firm leaders who suspect their collections discipline is weaker than it should be, I would start with four areas:
- Review DSO by service line. A firmwide average can hide meaningful differences among tax, audit, and advisory work. Looking at each service line separately can show where collections are slowing.
- Compare write-off rates by service line. Higher write-offs can indicate pricing, billing, scope, or collection issues that warrant closer review.
- Examine aging by partner. If billing and collections practices vary by relationship partner, receivables data can show where those differences are affecting cash flow.
- Look closely at older WIP. Completed work that remains unbilled can create as much pressure on cash flow as an overdue invoice. If WIP has been sitting for 60 days or longer, leaders should determine what is preventing it from being billed.
Cash flow does not need to be every partner’s daily responsibility, but the processes and expectations that shape it are leadership issues. Firms that understand where work is getting stuck, set payment expectations early, and address problems before invoices age too far are in a much stronger position to make decisions about growth, staffing, and investment.
About the Author
Alfredo Garza is an enterprise sales director at 8am, where he works with large accounting and law firms on payments, billing, and accounts receivable strategy. He also leads the enterprise segments for CPACharge and LawPay. Garza has spent six years on both sides of the ledger in B2B payments, starting in accounts payable before helping firms automate how they get paid.
