Let’s start with a truism. No accountants complain that their clients are paying them too much. Conversely there are four 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. Their clients won’t pay higher fees or for ‘extras’ even when asked
If your basic fees are too low then now is the time to consider how to break this to your clients. And you need to decide whether this is necessary as regards all or just some of your clients.
In an uncertain economic climate you would be forgiven for thinking about again holding your fees at the same level as last year. And that may be the right decision for some of your clients. Only you know your clients well enough to know if that will make sense and whether you need to adopt the same position for all of your clients – even the ones who are more of a problem than a pleasure to deal with.
When things are tough the chances are that you will lose some clients – and those that you can’t afford to spend time with are probably most at risk. Either they pay you more or they should move to someone else 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 would include building up work in progress that cannot be billed because the client has gone out of business).
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. If it’s more than you currently earn you will probably need to consider a mix of increasing the fees paid by existing clients, increasing the services you provide to existing clients and charging extra for these and generating new fees from new clients. 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 existing 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.
I’ve addressed related points in many previous blog posts including: