Optimizing Engagement Letter Workflow for Your Accounting Practice

First impressions are extremely important. Oftentimes a client’s first true exposure to your work style and professionalism is through an engagement letter.

An engagement letter is an informal but binding agreement between the accountant and the client that spells out important information about the work to be performed. Key topics like a description of the work to be completed, the client’s responsibilities, pricing, important contacts, and other information are included in the letter.

Many accountants currently use a very manual process to complete engagement letters. This may involve starting with a Word document and merging fields to create the letter, followed by creating a PDF and then sending it to the client. Then the client needs to print, sign, scan and send it back. The client is then invoiced after receipt of the engagement letter.

This manual process is not ideal as it leads to wasted time and effort, especially when it is repeated for each and every client. This article will cover some easy ways for you to streamline the engagement letter process without sacrificing the effectiveness of the letters.

Use Engagement Letter Templates

If your firm hasn't yet defined and implemented an ideal client profile and a menu of ideal services, maintaining and piecing together engagement letters for each specific client can be a daunting and inefficient process. Instead, look for an Accounting Practice Management Software solution that can take some of the manual work out of the process by automating some of the steps, including providing engagement letter templates.

Engagement letter templates save time from having to complete a new letter for each new client engagement.

One benefit of templates is that they keep the letter in a standard universal format that can be accessed across multiple devices. There will then be various ways to easily customize the letter for your specific client. Another benefit is that the templates are all accessible in the same place. This prevents you from having to search in prior year folders for the engagement letter and manually change all of the dates.

Using an engagement letter checklist can also help ensure your letters are thorough and effective for both parties in ensuring a smooth business transaction. To save you from the effort of creating a checklist, download "The Better Engagement Checklist." This engagement letter checklist can also help ensure your letters are thorough and effective at ensuring a smooth business transaction for both parties.

Allow Electronic Signature of Engagement Letters

Another way to streamline the engagement letter process is to allow the client to sign the letter using Electronic Signatures. Offering electronic signatures eliminates several steps for the client, including printing out the document, signing, scanning, and emailing back to you. These manual steps are replaced by just a couple of clicks on the screen. If you have the right tools in place, an electronic signature is just as secure as a traditional signature.

Automation of Invoicing Process

In a manual engagement letter workflow, once the signed client engagement letter is received, an office manager or other personnel will typically initiate a separate invoicing process. Creating the invoice, saving the invoice with the other client files, sending the invoice, receiving payment, and applying payment are then also done manually.

With the right practice management software, an automated invoicing process can eliminate several of these steps. Once the electronically signed engagement letter is received from the client, an invoice is automatically prepared and sent to the client using the same pricing and contact information that was included in the letter. Then, when the client receives the invoice electronically, they have the ability to pay instantly. The software will automatically receive the payment and apply it to the open invoice. Finally, the relevant documents are saved in a centralized location that is easy to access across multiple devices.

Conclusion

Engagement letters are a very important part of your relationship with your client. Offering your clients an easy way to complete the process is a great onboarding experience that kicks off the relationship on the right foot. Unfortunately, it is very easy to make mistakes with engagement letters. 

If the letters are done incorrectly or inefficiently, however, they can result in wasted resources and time for both parties. Optimizing the creation, sending, and receipt of these letters will free up a lot of time and cost savings for your business in the long run. Seamlessly interfacing the engagement letter process with the invoicing process will increase the savings even more.

Having an Accounting Practice Management Software that can automate these processes will help you and your organization realize these important cost and time savings.