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.
I’d like to add to the list of “bad” clients those who are rude or abusive to their accountants – partners and staff. Also those who refuse to take advice about how to keep their records.
I knew one client who’d have fallen into both those categories – rude, abrupt, and couldn’t see what was wrong with his bank reconciliations and why we had to re-do them (the same bank reconciliations that had “Adjustments” of £000’s each month!).
I think all of us who had to work with this client would have gladly clubbed together and agreed to have our combined salaries reduced by his fees, in order to get rid of him.
M
Emily did you sack the client – I can think of no reason to keep abusive clients.
Mark I was interested in you comments – I also like the idea of good clients being appreciative of the advice and well connected. Well connected clients can make you very rich!
Good article and I completely agree. I think a lot of companies find it difficult to ditch clients since often they work hard to win new clients.
However for some of or all the reasons that you list some clients are simply not worth the time and hassle.
I also find that when you are finding it difficult to reach your client whether on the phone or email or both this can be very frustrating and cause lots of delays, frustration and wasted time. You shouldn’t have to keep on phoning and emailing to get a response or some action from a client = another reason to ditch.
In our profession of accounting we have to work with both good and bad clients. It is not possible to ensure that we always work with good clients so we should have experience to handle every type of clients. The information in this post is very useful about dealing with bad clients.