Quote: January was hell – and it was my own fault

An accountant I was chatting with recently made this astonishing admission. I have to admit I was surprised by his honesty and self awareness.

Most accountants blame their clients for ignoring requests to produce their papers in good time to avoid a last minute rush before the 31 January filing deadline for personal tax returns. My friend acknowledged that with him it’s as much a question of priorities. Even if clients do supply their papers in good time he focuses his attention on meeting earlier deadline such as 31 December for 31 March company accounts and, before that, 30 September for 31 December company accounts.  I’ll bet his personal tax return clients wouldn’t want to hear this.

He told me that he incentivises clients to provide all their papers before the end of October each year. He doesn’t always have time to check that the papers are complete and sometimes has to ask for missing details when completing their returns in December and January.

I suspect that my friend is not alone. What do you think and what lessons can we draw from this situation?

by

Avoid this mistake when a client disputes your fee note

We’ve all had them. The client who sends a detailed letter/email listing a load of issues and problems.  Sadly I can recall having the odd one or two such missives when I was in practice.

I remember the feeling of indignation. The frustration at the unfairness of the accusations. The unreasonableness of the assertions and the one-sided nature of the complaint which totally ignored anyone’s perspective other than that of the client.

Yes, I know. The client is always right. Except they’re not. Sometimes they’re wrong, mistaken or liars.

I recall one occasion over ten years ago when I received a detailed list of issues from a client in response to the invoice issued by my tax manager. I went through the list and made a few notes. I gave these and the client’s letter to the tax manager to comment on. We crafted a point by point response. We were satisfied we had addressed all the points thoroughly and fairly. We sent our letter. This had the inevitable consequence.

We got another letter. With the benefit of hindsight I suspect the client was playing with us and playing for time. I don’t remember if there was another exchange of letters or not, but I do recall a meeting where we went through things line by line again.  Eventually the fee was paid and the final amount was not much different to the original bill.

I had made a fundamental mistake in replying to the complaint letter point by point.

What I should have done was to pick up the phone, apologise for any misunderstandings and ask what the client wanted. And then deliver that or discuss it in order to reach a fair result as quickly as possible.

Few clients WANT a line by line, point by point response to their letter of complaint. Your detailed reply simply invites another round of the same game. Perhaps the client is simply trying to buy some time before they will pay you in full, maybe they just want a small reduction in the fee or a change in the personnel dealing with their affairs. Maybe they want a big reduction in the fee. Maybe they are going to be so unreasonable that YOU should decide you don’t want them as a client any more.

Far better to reach one or other of those outcomes asap and get paid what you’re going to get paid asap. Don’t you agree?

Related posts:

7 steps to resolving client complaints

by

Billing attitudes to quicky items of advice

The Tax Advice Network includes a private forum area where the tax adviser members can discuss and share ideas and issues. No one else can see or take part. A recent discussion concerned how different tax advisers deal with calls that only take 10 or 15 minutes.  A number of different views were expressed. My contribution was to refer back to a blog I posted last August: “I hope they’ll tell someone about me”

Of all the contributions from advisers who promote their services through the Tax Advice Network, this one seemed to be the most commercial. What do you think?

I am set up to bill small pieces of advice and  regular clients use me as an ad hoc advisory service for both large and small matters so I have no problem in charging for small bits of work. I see no benefit in giving free advice to professionals who phone up a stranger expecting something for nothing because that mindset probably repeats itself and they move on to the next mug. I am surprised that accountants would seek to do this because they, like us, are selling their time and expertise!

As an expert who only does one off work I stay well away from the notion of  a free initial consultation because there’s often nothing more to come anyway.  I have a different view of private individuals who are a riskier issue altogether and I am not surprised with the something for nothing chancers here. I tend not to advise at all without a formal engagement. There is little chance of any repeat work from this source but if bits of advice are given too freely and misused or misunderstood can we get sued and do we always have the full story anyway? I am very cautious with this in mind where I do not know the client.

Finally, why would we want to give our expertise away free? Even small bits of advice are often the product of years of experience and may save large amounts of tax. Surely this is worth something and I am reminded of a discussion at a partners meeting many years ago as to how to value the bit of advice that takes 15 minutes and save £1m. Do you charge 15 minutes or say £10,000+ (OK – it was a big 4 firm) for the umpteen years of training and experience that enables that answer to be given quickly?

It seems to me that if it is good advice then its worth paying for and if it’s good advice at a reasonable price then there should be a potential of good repeat work afterwards.

by

Will you get paid more for iXBRL accounts?

Quick question on 12 July 2014: Please add a note below or email me as to how and why you found this post. It baffles me that this 4 year old piece is routinely one of the most popular on my blog, with hundreds of views every week. Why would that be?
——-
This is a follow up from one of last week’s blog posts. Here I’m looking more at the extra time and effort involved in complying with the new iXBRL efiling obligations.

Clients will only agree to paying additional fees if they perceive that additional work is being done and that this benefits them in some way.

Tagging company accounts for the taxman, using iXBRL tags, is going to be obligatory from 2011.

It seems that plenty of accountants have yet to determine exactly what they will be doing to ensure that their clients’ accounts are  compliant. I’m not sure how late you can realistically leave it before you find out what is going to be involved here. You’ll want to do this both to ensure that you are able to comply with the new obligations AND to manage your clients’ expectations.

Most importantly is the need, from a commercial perspective, to ensure that you only devote extra time and effort to tagging each client company’s accounts etc if you are sure you will be paid for doing so.  Asking for additional fees only after the event is unlikely to be very remunerative! Is it ever?

by

Who bears the cost of new efiling rules?

As software evolves to meet new legislative requirements so accountants assume this will be built into the price they pay for their software.

There is little prospect of accountants asking clients to pay extra – or of them securing additional fees if they did ask!

Equally, accountants will not willingly pay extra for updates of their software if these simply enable them to ensure that clients comply with their legal obligations. Thus suppliers will have a hard job on their hands to persuade existing accountancy users to pay extra.

In practice the only community who can seriously be expected to bear the development costs, if not the developers themselves, will have to be new users; – perhaps those who migrate away from competitors , as well as those who are computerising for the first time.  This is unusual as normally it is the pioneers who pay a premium for the privilege of being the pioneers and at the forefront of new developments. Have newer users in recent years been paying as much as those pioneers for their accounting and tax software? I guess not. So can those who have been putting off their move to online filing be expected to pay more so that the software developers can recoup their investment? Or will the only losers be the shareholders and owners of the developers? They have no choice but to invest in the new developments.

I said earlier that few accountants will successfully persuade clients to pay a surcharge to cover the costs of introducing new software. Some firms tried that in 1997 when self assessment was introduced. In most cases clients rebelled and accountants had to absorb the cost of introducing new software. This time round it is likely to be the software suppliers who bear the costs. Sorry guys!

What do you think?

by

You have to use different bait to attract bigger fish

A sole practitioner accountant recently asked how could he attract the ‘bigger fish’?
In effect he wanted to know how he could start to attract and win clients who would be prepared to pay bigger fees. He said he wants to more than double his average fee – moving from around £600 upto £2,000.

Here’s my initial reply:

What services do the ‘bigger fish’ look for and that you can provide? Are you looking to attract prospects with more complex affairs or those with more messy records?

What services would anyone want and be prepared to pay £2k for that you have the interest and ability to provide.

When you are networking are your stories and examples about small clients or big clients?

Do the messages on your website and marketing material represent the right sort of bait for the work you want to attract?

Like this post? You can now obtain my 10,000 word ebook containing loads more marketing insights, short-cuts, tips and advice aimed specifically at accountants. You can buy the book or download a summary for free here>>>

by

“Why we’re going out to tender for new auditors”

Chatting with a business contact this morning he told me why he feels compelled to go out to tender for new auditors. Bear in mind that he is a VERY experienced FD and has been in post at this multi-million pound business for 4 years. The auditors in question are a top ten firm and have been in post for 5 years.

I share below the points my friend made:

Our current auditors said they’d staff the audit with local [north London] staff; in fact the manager and staff are based in Birmingham.

We don’t know what they’re doing half the time. They ask for random invoices and have told me lies.

They do interim work during the final visit and disrupt us at our busiest time of year.

My finance team are close to resigning due to the attitude of the audit staff.

My number 2, who has been in post for 8 years, cannot understand why the auditors are so uncommunicative and disruptive in their approach.

We agreed timetables for respective actions to avoid being charged for cost overruns. When the auditors miss their deadlines and cause delays they then report US to the audit partner if our next stage is behind the original schedule.

We know they underbid for the work originally and have been constantly trying to push the fees up each year, which we have resisted as the group structure has been simplified.  We agreed a small excess for cost-overruns last year. There won’t be any this year.

I know the auditors have to be independent but ultimately we need to work together to ensure the financial accounts are right. This firm (other than the partner) takes a more ‘them and us’ approach than any firm I’ve ever worked with before.

We’ll go out to tender again and we’ll have to let them re-tender but there’s almost no prospect of them being reappointed.

If I didn’t know better I might think that the FD has something to hide and that the auditors are just doing their job properly and objectively. And maybe that’s how some audit partners excuse themselves when they lose a re-tender – as is bound to happen here.

I understand that over the years there have been NO major audit issues or disagreements re figures or presentational adjustments. The audit partner has been objective, professional and helpful. He’s been firm when he needed to be – but this has not caused any serious disagreements or issues.

Lessons?

by

Lessons for accountants from….dentists

A number of people have mentioned in conversation recently how much it costs to go to the dentist.  In each case their dentists are getting close to retirement and their longstanding patients are stating to look for someone new. The patients are shocked at how much more they have to pay their new dentist.

Their automatic assumption is that their old dentist was out of touch with what his contemporaries were charging. They feel that they’ve been fortunate to get away with paying very low fees for so long. Now their dentists are retiring they have no option but to pay commercial rates.  They specifically do not want to try to find another older out of touch dentist. They assume that a new dentist will be more uptodate, use newer procedures and be around for some time into the future.

None of the people who have shared these stories with me have considered telling their old dentist that he’s been undercharging them.

Is there a lesson here for accountants I wonder? Especially those who have kept their fees unreasonably low for many years? When you retire your clients will find that they cannot secure the same quality of service without paying more commercial fees.  In the mean time the only person to lose out is you.

There may be other lessons we can learn from the analogy. When you choose a new dentist what do you look for? Do you think about their professional qualifications? Do you make assumptions about their competence, experience and ability? Would it matter if they promise a personal service? (What other type is there?).   What REALLY matters to you when you are recommended or choose a new dentist? What REALLY matters to prospective clients when they are recommended or choose you as their accountant?

Like this post? You can now obtain my ebook containing loads of valuable insights, short-cuts, tips and advice for accountants who want to STANDOUT and speed up their success. You can buy the book or download a summary for free here>>>

by

5 ways that Accountants can make more profits

There are essentially just five basic approaches to making more profits as an accountant in practice:

  1. Increase your charges – for doing the same work you have always done. This requires you to increase the perceived value of what you do
  2. Speed up collection of your fees and so reduce your capital requirements and interest costs
  3. Reduce the time you spend providing your services whilst keeping your fees the same as before. This allows you to take on more (profitable) work.
  4. Provide more value and charge more than you did before NB: this is not the same as simply ‘doing more work’ for existing clients
  5. Provide additional services and charge for these. Avoid preconceptions about what clients will pay.

There are also 2 supplementary things you can do:

  • Get existing (good) clients to introduce new prospects just like them
  • Sack the duff D-list clients who get in the way

You will appreciate that my focus here is on generating more profits rather than on increasing your top line, for example through adding new clients secured through advertising, marketing and networking.

In my talks on this subject I tend to focus on the first 5 points above although I also cover the 2 supplementary issues and some of the less costly methods of securing new clients and turnover. In so doing I share dozens of practical, commercial and easy to implement ideas that I know are being applied by other smaller practitioners.

by

Easyjet pricing by accountants

Anyone who has heard me speak recently will recall my encouragement to review the way in which fees are set. I’ve also posted numerous previous items on this subject.  A summary and link to them all is included in this one: Negotiating fees when times are tough.

I’ve just had a call from an accountant who was telling me how successfully he has found what he calls the ‘Easyjet approach to pricing’ his services.

Simply stated he quotes a low fee for completing a tax return in April or May and the fee increases as the year progresses.  The fee charged for preparing tax returns in Dcemeber or January is more then five times the fee he quoted for doing the work in April or May.

He doesn’t feel himself constrained by time costs. After all his time and that of his staff are largely fixed costs.  Business clients pay a fee by reference to their turnover – the bigger the client grows the bigger the fee he charges. he spends no time analysing time sheets, worrying about write-offs or under-recoveries.  The accountant’s focus is on the aggregate fees he needs to generate to cover all his costs and make a profit. Anything over and above that is pure profit.

Now I know that such systems are not as simple to operate in practice as they are to summarise in a telephone conversation (or on a blog). But the point is that traditional time costing for recurring accounting services is not going to help ambitious accountants to win new clients in a recession.

What other examples do you have of innovative approaches to pricing by accountants?

Like this post? You can now obtain my ebook containing loads more insights, short-cuts, tips and advice aimed specifically at accountants who want to STANDOUT and become more successful. You can buy the book or download a summary for free here>>>

by