WHAT IS AN FPA?

In last week’s blog, I mentioned that business owners might want to consider including unlimited assistance in hiring bookkeepers and consultants as one of the services in the annual FPA you have with your CPA.

At this point, you may be asking yourself, “Just what is an FPA?”

I discussed FPAs as part of my November 29, 2006 blog on year end planning. I think it’s time to re-visit the topic.

An FPA is a Fixed Price Agreement between a customer and his/her CPA.

Through the use of an FPA, you can set the price and payment terms of your accounting services for the year. Further, the FPA will define the scope of services to be provided by the CPA and include any responsibilities of the business owner. In addition, the FPA should include the CPAs service guarantee.The advantages of an FPA are numerous.

• The business owner is relieved of any uncertainty regarding the amount of his/her accounting bill.
• The business owner can manage cash flow according to the payment terms of the FPA.
• FPAs break down the barriers of communication between the business owner and the CPA.
• The service guarantee provides the business owner the comfort that he/she will receive the quality of service he/she deserves.
• The business owner is free to attend to other aspects of his/her business.
• Payments to the CPA can be set up as memorized transactions in the accounting system.
• The FPA typically includes ongoing access to the accounting, tax, and business advice the business owner needs on a fixed-price basis. The business owner is not inhibited from seeking timely advice by the fear of a clock running endlessly. This offers the business owner access to the accumulated wisdom of the firm through CPAs with substantial experience who can help enhance the company's future and achieve its business goals.

So the next time you need professional services from your CPA, sit down and negotiate the service and pricing terms ahead of time, and have them documented in an FPA.
Your CPA has sample FPAs on the Cd that came with his/her copy of the Professional’s Guide to Value Pricing. Samples if simple FPAs are available in the Resource section of the Verasage web site. www.VeraSage.com