How to Simplify the Finish and File Process

The keys to a successful tax season include an efficient, standardized workflow, a well-trained staff, and clear client expectations. By rearranging a few key workflows and clearly communicating up front, many firms have eliminated client touchpoints and non-value steps from the tax preparation process.

“Finish and file” includes everything after the firm finishes the tax preparation: sending the return to the client for review, collecting and tracking 8879 signatures, e-file, tracking acknowledgements, invoicing and billing the client for tax preparation services, collecting fees, processing client payments and returning client documents. Many firms lose productivity in the in the finish and file stage of tax preparation as a result of hangover practices from the days of paper processes. If the client doesn’t return the 8879 or doesn’t pay immediately, additional contacts and mailed invoices extend the process even longer.

Some firms allow the billing process to dictate the finish and file workflow. Intuit® ProConnect™ recently completed a tax planning boot camp where we polled users about their billing practices. Forty percent of tax firms said they bill by the form, and 37 percent bill by the hour. Most of these firms were invoicing after e-file, which creates multiple client contacts. It is more efficient and a better client experience to consolidate all the actions into a single client contact to complete the engagement. Anecdotally, these same firms say the effort to complete the tax returns and the fees charged don’t change much year over year. For most clients, firms adjust the bill to last year’s fee plus a small increase rather than accepting the invoice calculated by the billing system inputs.

Conversely, leading firms acknowledge that tax preparation is a function of value delivered, rather than the time invested or pages in a tax return, and they clearly communicate to the client what the fee is before beginning the work. They also communicate when the payment will take place to avoid the non-value steps of invoicing, billing and collection.

Renee Daggett is an enrolled agent, Advanced QuickBooks ProAdvisor® and the owner of virtual firm AdminBooks, Inc. Daggett reviews and standardizes her processes regularly to make her staff of 14 as productive as possible during tax season. Daggett says, “Having a payment authorization on file prior to beginning data entry on a client’s tax return allows us to work more efficiently. We’ve set the client’s expectations for price and procedure up front, we’ve promoted productivity within our organization by eliminating the need to reach out to the client post-data entry for payment, and we’ve eliminated accounts receivable by billing at the time of tax return completion.”

When firms resolve to communicate fees to clients before beginning preparation, it is possible to simplify the finish and file process into a single client contact. Here are a few more recommendations to simplify the finish and file process:

1. Deliver tax returns electronically. Create one PDF copy of the tax return to be retained as the firm file copy and sent to the client for review. Only send it once unless there are changes from the review. Some firms are still creating multiple PDF file copies, which requires additional time and steps without corresponding benefits. Use a secure portal, rather than email, to deliver returns securely. Intuit Link is a secure portal that is included with ProConnect™ Tax Online, Lacerte® and ProSeries®.
2. Offer e-signature. IRS and almost all states allow e-signature of individual 8879s, although e-signature of business 8879s is still not allowed by IRS. E-signature solutions reduce cycle time and improve tracking of authorizations.
3. Lead with electronic payments. While a minority of seniors (31 percent) still use checks, the overwhelming majority of consumers prefer electronic payment methods. Even with seniors, preparers can facilitate an electronic check or ACH debit. QuickBooks® Online Accountant includes a free subscription for tax and accounting firms to maintain their books. Use QBOA for efficient firm accounting, and consider enabling QuickBooks Payments to accept ACH, credit card and electronic payments.
4. Shred all client documents. A best practice to simplify the finish and file process is to stop mailing documents back to clients. This saves time, money and client contacts. Communicate a policy that all documents will be destroyed and the firm will retain electronic copies. Be explicit about the document retention period.
5. Do not send acknowledgments. An important best practice and last step in the standard workflow is to create a PDF of the fully accepted e-file acknowledgement and retain it in the firm files. However, instead of sending acknowledgement letters to clients, communicate a policy that everything is filed and complete, unless you inform them otherwise.

Clearly communicating changes to clients is key to a smooth transition. Here is a sample Payment Authorization Agreement, which includes a client message to communicate the change in the finish and file process. Making a few adjustments in the finish and file process can dramatically improve productivity and the client experience.