One of the most common issues for accountants is how can they stop getting caught out doing extra little bits of work for free? This has become more of an issue since they started quoting fixed fees.
The issue comes up less often for those traditional accountants who still claim to charge clients by reference to the time spent on their affairs. It’s much easier for them to charge a fee for the time spent on all the extra little bits and pieces that come up.
This is one of the reasons I rarely suggest moving all such clients onto a fixed fee basis. However, in general, I am sure that it is easier to win new clients if you are able to quote fees ahead of starting the work. That’s the approach most people look for when they switch accountants or are looking for their first accountant, these days.
So, how do you ensure you get adequately paid for additional exercises and extras you get asked to do during the year?
The starting point, as ever, is to manage new clients’ expectations from the outset. Do you give substantial free advice during initial meetings before a prospect has become your client? Lawyers don’t do this. You do NOT need to do this – as long as you know how to ask good questions that themselves evidence your experience and expertise.
My point here is that if you give away free advice during an initial meeting, your clients may well assume that you’re happy to do so anytime. You evidently don’t value your advice if you give it away free to people who may never become clients.
The next issue to consider is whether you really need to quote your fixed all-in-fee with no caveats. I’m a big fan of allowing clients to call their accountant any time and you not charging for such calls (subject to fair use caveat). The reason for such an approach is that you want clients to phone when they have issues or challenges you could help resolve.
Now we come to how you handle those calls that will require some research, work or a follow up after the call/email. This requires you to build your confidence and establish a system so that you can quote a fee for doing any work that flows from that call. It’s best to avoid it seeming as if you have plucked a number from the air.
Coming back to quoting fixed fees to new clients, it’s often best to offer them a choice of packages. It’s easiest to do this when you first take them on, but you can also migrate clients to this approach and help them choose the right package for them. What follows is just one way of approaching this. YOU may well prefer to tweak the idea to suit the way that you choose to work:
- Your basic fee for the essential work they want – no extras. £Xpm. Calls and queries will result in an additional fee of at least (say) £50 per call. “This isn’t very popular as most clients do want to speak with us during the year – and we enjoy such conversations”.
- Your popular package which you price at 1.5x £X pm – this includes an allowance for calls and extras (within reason) during the year, plus [other extras] and perhaps a guaranteed turn around of work within 4 weeks (say)
- Your premium package which you might price at 2.5x £X pm – this goes further than the popular package and includes other benefits – it also helps make the popular package look like even better value.
This is perhaps the real challenge. Those clients who have steadily asked for more and more extras that go beyond what you had in mind when you originally quoted your fee.
The best approach in each case invariably depends on the specific facts. In general you need to build up your confidence and decide whether you want to keep the client happy at all costs or if you can afford to risk upsetting and losing them. That’s rarely an ideal scenario of course.
Your best option here will also depend on how many clients need to be brought into line and whether it makes sense to send a standard communication to all of them.
To wrap up this blog post please think about how car mechanics operate. Can you operate as professionally as a good car mechanic? In my experience, they let you know before they do anything to your car beyond the standard service. They tell you what the extras will cost and they get your approval before they do the work. And then you pay them before you get your car back. If they can operate like this so can you.
Do get in touch if you’d like to have a quick chat about how you might address this issue in your practice >>>>