Let’s start with a truism. No accountants complain that their clients are paying them too much. Conversely there are five 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. They think their clients would struggle to find the money;
5. Their clients won’t pay higher fees or for ‘extras’ even when asked
If your basic fees are too low, don’t put off raising this with your clients. All you really need to do is plan your approach and remember that this could be different for different clients.
One accountant I mentor uses me as a sounding board to test his approach to having these difficult conversations with clients. He reports that his confidence is always higher afterwards and he doesn’t lose that many clients when he advises them of his new fee rates.
If your clients are struggling with cashflow you have a choice as to whether you increase your fees or continue to act as a charity or credit agency. With very few exceptions I would rather stop working for people who cannot afford to pay my fees – and to ensure I don’t end up having worked for free (eg: if they go into liquidation).
Much better to ensure all clients are paying fair fees and that those who cannot afford to do so move to another supplier 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 includes building up work in progress that cannot be billed because the client has gone out of business).
You’ll need to think this through before you start approaching clients to start work on this year’s tax returns.
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. 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 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.