Written commission agreement KL2004

Written agreements commissioning an outside party to handle accounting and financial administration matters is necessary to confirm that everyone acknowledges their responsibilities and limitations.

The financial administration union is forerunner in developing the industry practices. Accounting companies belonging to the union are obliged to enforce union regulated commission agreement terms as stated in the bookkeeping act 2004 (KL2004).

General agreement consists of the terms, responsibilities, terms of notice and other important details that may apply.

The contract should include details on task divisions, schedules, and concrete matters related to daily routines. Agreements vary substantially in the highly competitive business and the fine print in the terms of the agreement may transpire after it has been signed. In an unbiased agreement, the content is clearly presented in detail so that no surprises emerge.

Every agreement should clearly state the terms in case things go haywire and possible sanctions arise. A well crafted agreement should indicate to whom the responsibilities fall in different situations. The commission agreement can therefore be used to justify whether basis for contract termination is present.

 

The KL2004 contract terms can be downloaded from the link:

KL2004 Contract terms!

 

 

Commission without a written agreement?

A reliable, professional accounting company, always demands a written commission agreement in order to prevent future controversy.

Problematic situations may arise as a result of cooperation without the proper documentation. Verbal agreements are also binding but in troublesome situations, it is nearly impossible to prove what has been agreed of. In court the situation would lead to a word against word situation that could lead to an unfavorable decision to both parties.

An accounting company that dismisses the use of a written agreement, operate against the industry standard, TALSTA. Such companies do not meet the minimum quality criteria of an accounting company as stated by the financial administration union.

Reluctance to sign an agreement can be regarded as a sign that the company does not want to commit to the cause or take responsibility of any mistakes they make!

 

Commission termination

The commission agreements can always be terminated according to terms. Termination timeline according to the Bookkeeping act 2004 is two months.

Tietotili enforces a three month contract termination timeline in the commission agreements.

An accounting company is responsible for their work as stated in the contract. In case of a contract termination, the company has the minimum period of notice to rearrange their systems to fit the new work environment.

Services are provided until the end of the notice period. Upon the end of the commission, a balance sheet breakdown of the returned materials must be compiled.

If the client chooses to retract their material immediately, the accounting company has the right to charge the client a monthly fee equal to their median monthly charge until the end of the notice period as compensation for the premature termination. This way the company has an opportunity to adjust their processes to the decreasing workload.

Terms of notice should always be delivered in writing to establish dates and grounds of termination.

 

 

Accounting company as the reason for termination

The usual reason for contract termination is long lasting dissatisfaction with the actions, services, or systems provided by the accounting company. Sometimes the company’s constant inability to accomplish promised services in the timeline can lead to termination. At this time it is a necessity to change the service provider as the person in charge is liable for tax and other law violations, even if the services are outsourced.

The accounting company’s inability to successfully take care of the client’s needs does not relieve the client of the violations or their liability. It is crucial to terminate commission contracts to companies that cannot provide their promised services. The worst case scenario can lead to substantial interests for taxes and other sanctions that not only hurt the finances, but also portray a very negative image of the company to stakeholders and other outsiders.

If the commission contract is terminated due to the inability to deliver on agreed terms and schedule, the right for compensation til the end of the notice period is not justifiable. The client should be fast to act when problems arise with their accounting company because years of poor service will definitely take a toll on the practice.

In a conflict situation, the accounting company should be able to prove that the accounting deadlines have not been met due to a lack of cooperation on the client’s behalf. In such scenario the accounting company can demand compensation rationalized by the client’s unwillingness to provide appropriate material in time, or answer matter related inquiries.

 

Payment conditions

Payment terms are dictated in commission agreements, Tietotili invoices are to be paid within 10 days due date net.

Most of an accounting company’s billing is based on labor hours or processed transaction amounts. Invoices are therefore based on work done in the past. The payment due date is actually far more than 10 days since the work has been done prior to billing date.

Labor costs are the biggest costs for an accounting company, which is why Tietotili uses a bimonthly billing system. Periodical billing is used to cover the labor costs and clients can easily breakdown what the invoice consists of, as there are not a month worth of entries.

It is essential for an acconting company’s working capital that invoices are paid within deadlines.

According to the Bookkeeping Act 2004, provided services can be interrupted if invoices are not paid. Notice of service interruption must be delivered to the client in writing. Upon delivering the notice to the client, the accounting company relieves themselves of any future liability arising from untreated commissioned services.

 

 

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