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BIP's and PIP's Professional Service Firms

PIP’s and BIP’s are models that are used in professional service firms. A PIP is a “Payer Initiated Payment” – credit management model, and a BIP is a  “Biller Initiated Payment” – credit management model. At smartAR we have worked with hundreds of businesses to support them to understand the pros and cons of each model. We can also guide businesses to transition to a BIP model if they wish to free up time and reduce debtor days, with minimum impact to business operations. 

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Changing From A PIP To A BIP Model

A firm using a PIP model is typically one that gets a new client (or does more work for an existing one), agrees the fees, terms and payment conditions, does the work, sends the bill promptly and then… waits for payment.

Does this scenario sound familiar? You sent an invoice over a month ago, still unpaid – you follow up with the client who says things like:

• “We didn’t get the invoice, can you send it again please”; or
• “The owner is away on holiday, they will pay on return”; or
• “We are waiting for a big customer to pay us – can we push this out to next month?”

These are common excuses heard by firms still using a PIP credit management model.

Situations like these mean that professional service firms operating a PIP model have no real certainty of how much will be paid or when. A PIP model leaves the full control and timing of the payment with the client, and that can wreak havoc with your own cash flow planning.

The downsides of a PIP model are numerous. You have all the added hassles, administration, costs and stress associated with chasing overdue debtors. Nobody likes chasing debtors – but if you don’t chase them, some clients might never pay you!

Debtor management doesn’t need to be like that. With changing technology there is now a much better way for professional service firms to manage collections using a “BIP” (Biller Initiated Payment) credit management model. In short – no more chasing clients. You are now in control. Your payments become 80%+ predictable and you have much more working capital available. Best of all, clients love it.

smartAR are here to help your firm make this transition and achieve reliable and predictable cash flow.

smartAR Are Helping Professional Service Firms To Transition From Operating A PIP Credit Management Model To A BIP Model.

PIPs & BIPs Infographic

In this recorded webinar Dave Birch explains PIP’s and BIP’s

Each year the professional service sector wastes billions of dollars and millions of hours. They feel like they are “stuck in the mud” with unneeded client tensions, hassles and inefficiencies inherent with operating an outdated “PIP” credit management model.

Firms that operate a “PIP” model are in essence fighting with one hand tied behind their back. And sadly, many firms don’t even know they are doing it, or that there is an alternative. So, what is a “BIP” credit management model?

Join Dave Birch as he explores this model and the advantages a “BIP” firm has.

Why smartAR?

There are all sorts of smart consultants who could potentially help you with this project. So why work with smartAR? Here are several reasons that we trust you will find compelling:

• Improving accounts receivable cash flow for professional firms is our focus and sandpit.
• smartAR has similar clients with similar problems, meaning this is not new territory for us.
• Our experience spans using finance, technology, and people to improve cash flow predictability and velocity, which means we are not one-trick ponies selling a single solution.
• Quick “wins” are important. We can help you identify easy and immediate gains to kick start your project.
• Most “consultants” are theorists, whereas smartAR are primarily “doers”. That means our advice is founded directly on relevant experience with similar project execution.

Have other questions about PIPs and BIPs?

If you would like some guidance on how you can transition your business from a PIP to a BIP model, schedule a free discussion with one of our senior Accounts Receivable Specialists.