Along with a new decade, a fresh start, the Summer Olympics, and a presidential election, 2020 gives us one more gift: an extra day!
That’s right, leap year babies: you get a proper birthday this year, and the rest of us get an additional 24 hours to spend however we want (really! February 29th is a Saturday. Thanks, 2020!).
But if you haven’t yet considered what that extra day will do to your billing process, you might be headed for trouble.
Who Will Be Impacted?
If you bill based on the number of days in a year, the actual number of days you bill will jump from 365 to 366. Because of this one extra day, you’ll end up billing your clients for one more day than you might intend to.
If your firm charges annual, one-time financial planning fees, or if you bill in advance (either semi-annually or quarterly), you should have already noticed this change.
Getting Ahead of Your Leap Year Billing
Adding one extra day in the calendar year every four years compensates for the fact that a period of 365 days is shorter than a tropical year — the time the sun takes to return to the exact same position in the cycle of seasons (for example, from summer solstice to summer solstice) — by about six hours*.
Is your head spinning? That’s okay. You don’t have to understand why a leap year exists to understand how to make sure it doesn’t derail your billing.
To update your billing so your clients aren’t billed for an extra day this year, simply contact the Orion SME Billing team (firstname.lastname@example.org) and ask them to update the leap year entity option to ignore the leap day. This ensures your clients won’t be billed for an additional day of service.
An Extra Dose of Billing Insight
In the spirit of 2020’s extra day, we wanted to offer some extra insight into billing best practices.
You have multiple options when it comes to calculating fees for your clients: in arrears (billing for past months) or in advance (billing for future months). There are also various valuation methods to choose from, the two most common being by Average Daily Balance (billing on the average amount in an account over a period of time) or Period Ending (billing on the amount in an account on the last day of the quarter).
The best billing method is the billing method that works most effectively for you. Check out this blog post to learn more about these methods, as well as a number of ways in which technology can help streamline your workflows.
And speaking of technology, don’t miss this blog post about our new Payout Dashboard, which offers complete transparency into each account’s payout breakdown.
Make sure your client accounts are ready for leap year billing. Click here to log into Orion Support and chat with our SME Billing Team.
Not working with Orion yet? Let’s take advantage of 2020’s extra 24 hours and schedule a demo! We’d love to show you how our end-to-end advisory solutions can help you operationalize your vision for success.
* "Leap year - Wikipedia." https://en.wikipedia.org/wiki/Leap_year.