What do you count as a bad client?

Feb 21, 2008 | Client service, Professional Negligence

I regularly encourage accountants to ditch their bad clients. There are two primary reasons for this.

– Following the Pareto (80/20) principle, you can be sure that your worst clients (however small the number) cause the bulk of the problems and hassle that you suffer. Conversely, 80% of your profits are probably generated by the top 20% of your clients.  I first commented on this concept last October.

– The complaints from and problems caused by your worst clients are more likely, than your best clients,  to end up as professional negligence claims or reports to your professional body for unprofessional conduct.

What counts as a bad client?

Let’s see if we can create a definitive list.  I’ll start with the examples I share during my talks for accountants.  Readers are encouraged to add their own  suggestions as comments.

On my list would go clients who display 2 or more of the following tendencies:

Before they become clients

  • Evidently expect free advice on the phone;
  • Reluctantly attend a meeting and seek further free advice;
  • Challenge elements of your standard terms and conditions;
  • Resist producing suitable identity verification evidence;
  • Delay signing your engagement letter whilst expecting you to start work;
  • Mentions that they have sued or reported one or more of your predecessors;
  • Resist making any form of up front payment (where this is part of your terms)

After being engaged:

  • Seeks further advice but is unwilling to accept that this will increase your fees;
  • Changes the scope of your work;
  • Resists any increase in your fee to reflect additional work they have requested [nb: I’m assuming that you would notify them of the increase before starting the extra work] ;
  • Appears not to value your time;
  • Insists on ‘gut feel’ advice rather than fully researched advice;
  • Uses buzz words and terms that they evidently don’t really understand;
  • Regularly needs to be chased up to provide information or other responses to your enquiries;
  • Delays production of key documents until the last minute;
  • Does not pay your fees in accordance with your payment terms.

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