What can you do if your fees are too low?

Let’s start with a truism. No accountants complain that their clients are paying them too much. Conversely there are five main reasons why accountants think their clients are paying too little:

1. They haven’t put the basic fee up to a commercial level;
2. They don’t charge more during their busiest period;
3. They haven’t asked their clients to pay for ‘extras’;
4. They think their clients would struggle to find the money;
5. Their clients won’t pay higher fees or for ‘extras’ even when asked

If your basic fees are too low, don’t put off raising this with your clients. All you really need to do is plan your approach and remember that this could be different for different clients.

One accountant I mentor uses me as a sounding board to test his approach to having these difficult conversations with clients. He reports that his confidence is always higher afterwards and he doesn’t lose that many clients when he advises them of his new fee rates.

If your clients are struggling with cashflow you have a choice as to whether you increase your fees or continue to act as a charity or credit agency. With very few exceptions I would rather stop working for people who cannot afford to pay my fees – and to ensure I don’t end up having worked for free (eg: if they go into liquidation).

Much better to ensure all clients are paying fair fees and that those who cannot afford to do so move to another supplier who can provide the level of help they need at a lower fee. What you want to avoid is hanging onto such clients and then suffering bad debts (which includes building up work in progress that cannot be billed because the client has gone out of business).

You’ll need to think this through before you start approaching clients to start work on this year’s tax returns.

I suggest you book a chunk of time in your diary to plan how you will do this and maybe to brainstorm some ideas that will work for your practice and your client base. In my experience whilst there are plenty of issues that are common to many firms, everyone is different so what works well in one firm is not automatically right for another.

I normally suggest that accountants start by focusing on how much they want to earn from their practice. Then you can determine what they will need to do to achieve that ambition. Only you can decide what you want and how you’re going to get it.

When your fees go up you will invariably lose some clients but even if you do, overall you are likely to end up with more fees and more time – a win-win situation. And if you also make a reciprocal fee arrangement with a smaller accountant to whom you refer your ‘lower value’ clients you can ensure that everyone is happy.

 

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Do you offer a service guarantee? I bet you do.

Let’s be realistic. If you did some work for a client but they weren’t happy because you made a big mess of it, would you insist on charging them extra to correct your mistake?

I hope you wouldn’t even consider trying to charge extra to resolve a mistake of your own making.  To my mind this is the start of a service guarantee. And it’s the sort of thing, which, if promised up front, can help generate confidence from prospective clients.

Over the years I’ve often seen references to service guarantees on an increasing number of professional service provider’s websites. I came across one last week and established that it wasn’t unique to the firm in question; Just put yourself in the shoes of a prospective client and consider how effective is the message below. It’s listed on some accountancy firms’ websites as one of the answers to the question ‘Why us?’

Our 100% Risk Free Guarantee…Use our services to help you pay less tax and increase wealth, completely at our risk. Our services are so outstanding there’s a 100% Risk Free Guarantee.

Here it is…

If at any time you are not completely happy withglobal-unlock-guarantee our work please discuss it with us. If we really can’t sort the issue for you then don’t pay for the part you’re not happy with. Ask for it at any time within 30 days of the work and we won’t expect payment. That means…

No small print;

No quibbles;

No questions asked;

No exceptions;

No strings

I think this is very cleverly worded and does put some (but not a lot) of responsibility on the accountant to achieve absolute clarity as regards the services to be provided up front.

How would you feel if a prospective client asked if you were as confident as this in your work? Or why should they choose you over another accountant that offers such a guarantee?

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Why your clients are indifferent and don’t recommend you

Many accountants claim that they secure much of their new work through word of mouth referrals. This suggests that clients are making positive comments about their accountants. They may do that if they’re particularly happy but in the same way any unhappy clients will be quick to complain about their accountants.

I’ve heard a large number of people talking about their accountants in recent years and it’s fair to categorise those views as good, bad, or most often – indifferent. Well at least it’s not ugly!

Good

This seems to imply that things couldn’t be better. Clients believe that their accountant does what they want, when they want it and for a fee that they consider to be good value for money. The client feels that they get pro-active advice and are very happy to recommend their accountant to friends and family.

Bad

Clients feel that they’re putting up with bad service, high fees and/or get little of value. They certainly wouldn’t recommend anyone they know to use the accountant.

Indifferent

This is how I describe those clients who think their adviser is ‘okay’. This might be because the accountant doesn’t wow the clients with great service nor do they feel that the accountant is charging excessive fees.

Sadly it seems to me that a high proportion of people think their accountant is just ‘okay’. The fact that they haven’t complained doesn’t mean we can assume that they think their accountant is ‘good’. It also means that the client is more at risk of moving to a new pro-active accountant than we might assume.

‘My accountant is great’

When I saw this comment on a business forum I asked the person concerned what made them say that? Here’s the reply:

“He keeps things very straightforward in his explanations not that I have any particularly complex matters to deal with but he acts quickly, keeps costs to a reasonable amount (not cheap but sufficient value), makes himself available as and when needed and I get comfort from the fact that he has a successful practice, nice small modern offices and polite and helpful staff. When I have required explanations re: overseas investments, capital gains tax, what I can put against tax to minimise it legally, he delivers his knowledge in an easy to assimilate manner”.

I think that’s about it in a nutshell. Of course different clients want different things from their accountants. And different elements of your service and style will appeal to different clients.

If your clients are getting the service and attention  they want from you at a price they’re happy to pay then they MIGHT be expressing a positive view. They’ll only do so when asked though. Are you consciously doing anything to ensure that your clients see you as good, rather than bad, or do you risk them being indifferent?

It’s only if your clients think you’re good that they’ll be saying positive things about you. And if you rely on word of mouth referrals for new clients, you may find that we are moving into an age when you need a more active approach to encouraging these.

What do you do to actively encourage positive word of mouth referrals?

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New hologram support service for accountants

Press Release

Renowned accountants’ mentor and commentator, Mark Lee, has teamed up with a Tokyo University for what he is calling an outsourcing knowledge experiment.

This new service is quite distinct from Microsoft’s recently announced holoportation which uses different technology. Using a simpler Japanese originated smartphone app, accountants will be able to have a hologram of Mark projected into their office to provide outsourced practice support, knowledge and advice.Hologram of Mark Lee

Mark is delighted to be able to offer accountants a facility to interact with him akin to that of the holographic doctor in the TV series ‘Star Trek Voyager’.

“Obviously this new facility isn’t comparable with what may be available in the 24th century but it’s still way beyond what we might have imagined just a few years ago. It seems like Magic but it’s science” says Mark who is Treasurer of The Magic Circle and includes a touch of magic in his keynote talks.

The technology in question was developed in 2010 by the University of Tokyo’s Department of Complexity Science and Engineering (DCSE). Mark is the first person in the UK to be licensed to test the technology for commercial purposes. He became involved through a friend, Pria Lolof, who works at the DCSE.

“We’ve been planning this for some time and are concerned that Microsoft’s recent announcement about their holoportation is a spoiling tactic. The timing is very coincidental” says Mark who has been providing support to smaller practitioners for many years and has been looking for a way to fill a gap in his service offerings.

“I provide loads of free stuff on my website and a low cost online course to help accountants build a more Successful Practice. Beyond that I have a face to face group called The Inner Circle which meets in London and a premium 1-2-1 mentoring facility too.

I’ll be launching a new online programme shortly to provide support to a wider range of accountants around the UK. This hologram facility may become the technology we use to deliver the programme. If it turns out to be impracticable I’ll go back to the original plan of online meetings.”

The hologram service is only being promoted today because of the nature of the Japanese Outsourcing Knowledge Experiment. Thereafter accountants will be invited to attend a webinar being prepared especially for sole practitioner accountants who want to make a breakthrough in the development of their practice. Please email Mark if you would like to be advised when the webinar is being run.

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