One of the most common issues accountants raise with me is how can they stop getting caught out doing extra little bits of work for free? This has become more of an issue for many of them 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.
That is NOT to suggest I ever advocate returning to such a system.
But it is one of the reasons I rarely suggest moving all such clients onto a fixed fee basis without any consideration for how often they require additional services or advice.
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, these days, when they are looking for their first accountant.
So, how do you ensure you get adequately paid for additional exercises and extras you get asked to do during the year?
Newer clients
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 do NOT do this. You should NOT do this either. You do NOT need to do so 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 any time. In their minds, 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 most 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. You should be delighted if a client chooses your premium package so only include extras you would be happy to provide for a client paying the premium fee.
Where, during the year a client is going beyond what you consider to be ‘fair use’ of your allowance for calls and extras, you can explain that they either need to move ‘up’ to the premium package or to pay for additional calls.
More established clients
These, perhaps, are 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 confidence in your self worth and decide whether you want to keep such clients happy at all costs or if you are prepared to be firm, fair and professional. That may also involve risking causing upset 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. It is often best to deal with them one at a time.
Be professional
To wrap up this blog post let me suggest that you think about how car mechanics operate. Can you operate as professionally as a good car mechanic?
The best ones I have engaged over the years always let me know before they do anything to the car beyond the standard service. They tell me what the extras will cost and they get my approval before they do the work. And then I have to pay them before I get your car back. If they can operate like this so can you.
