Let me be clear I’m not saying that everyone should or can do this. Simply that some accountants do it.
I was prompted to write this blog post after engaging with a couple of accountants on twitter. Here are their tweets:
Standing order mandates delivered to the bank. Get the customers paying in advance on fixed fee quotes. That’s the way to do it!
I do the standing order over ten months. They get January and February off. Then we negotiate next year’s fee. People like it.
Any extra work has the fee agreed in advance. Tax planning and tax credits on a value basis adjusted to actual when HMRC agree.
I think the two month post-Christmas payment holiday is a winner. Works for Council Tax!
Every one of my clients pay monthly fixed fees in advance. Nobody ever complains. It should be the norm. It is with Broome.
It helps that we provide a Very Good Service!! backed with money-back guarantee
During some of my talks I often raise the concept of ‘fixed fees’ as one way in which accountants can reduce the time they spend on the billing process, improve their cashflow and reduce arguments about fees. Those who are implacably against the idea seem to feel that they HAVE to charge clients by reference to their timesheets.
Look. If that works for you, by all means continue. But do recognise that more and more accountants are winning new clients who want to pay a fixed fee for their annual service. That’s irrelevant of course if your clients are happy, you’re happy and you’re winning new work that pays the fees you feel are fair for the work you’re doing. The thing is that many accountants, who operate in what we might call ‘the traditional way’, cannot honestly answer ‘yes’ to all 3 of those questions. What about you?
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Partly it depends on how predictable the project is in terms of work.
The vast majority of the work I do is either a monthly retainer, or – for most of my tax work – I quote a fixed fee.
[…] This post was mentioned on Twitter by Mark Lee and Richard Adams, John Hotowka. John Hotowka said: RT @BookMarkLee: Just posted: These accountants offer a fixed fee service. Do you? http://bit.ly/ht3d0b […]
Clients pay for an end product or result. This is what you should be focussing on. They are not interested in how long something took so why would you charge for that? Charging by the hour does not motivate you to become efficient and lean. Fixed Pricing does.
And if you get paid on a monthly basis, you have no cash flows with locked up WIP. I actually have significant negative WIP.
As I was party to the above Twittercussion I’d like to add my Tuppence worth…..!
Fixed pricing on monthly SO/DD is the way forward, but it doesn’t suit every client and every accountant. I started my practice on a Fixed Fee basis and never completed timesheets, until I had a dispute with a client. From then on, I complete timesheets every day and write-off (or add) any time necessary back to the Fixed Fee.
Without doing this, I simply would not know which clients have taken up more of my staff’s time than others.
After all, we are a labour intensive business. How someone could not even comprehend measuring and tweaking this is beyond me.
Negative WIP?
If the clients are paying in advance, should not the monthly standing orders be directed into a client account until such time as a bill / invoice is issued, then the money can be drawn from the client account?
As I deal mainly with small businesses, one man self employed people, it is very difficult to give a fixed fee. The only time I tried it, I got a questioning look from my prospective client, who said ‘£20 a month for 10 months, whats the catch? Will you be adding other unspecified fees, other accountants have quoted £50 to £100 per month. Are you not very good at it?
Now, I quote fees from £175 per annum. After all, who knows the work involved. A client can have a turnover of £30thousand through selling 6 items at £5thousand, or £25thousand through selling groceries at an average price of £1 with numerous cash and carry bills.
The only fixed fee I now have, which closes on 15th Dec 2011, is a tax return for pensioners at £75
0141 636 1685
I am very wary of fixed fees and/or standing orders.
I think quite often some fat is built into the original quote as the accountant has no real idea of the work involved.
I have also picked up clients where they have got fed up with the monthly amount goes out with no contact (even though an ongoing relationship was promised).
So, what I will do is give an estimate rather than a quote, and also provide information on a cap for the estimate. Seesm to go down well
Fixed fee on monthly standing order reduces my admin time significantly. As a sole practitioner this makes a big difference to my profitability
I issue invoice at the beginning so there is no need for a client account (telephone support etc is for the 12 months). 50% of fees are paid before the year end and about 75-100% by the time work is received and completed depending on how prompt the client is with their books and records.
I still record time for internal use but I don’t need to be too obsessive about it (taking up more time). I uise the free software from Hourguard.
The best bit is feeling smug when I get those annoying sales calls about debt collection, invoice factoring, accountants’ finance companies. These little pleasures.