It seems to be one of life’s ironies that accountants in practice, as financial advisors to their clients, seem to be amongst the worst in the world at tackling money issues.
Imagine you’ve gone out to a pub and ordered and paid for your meal, and then decide that you did want a dessert after all. Would they give it to you for free, or charge extra? What about joining your local golf club, with a weekday membership? If you later decided to play on a Saturday, would you get that for free? Or you buy a standard class travel card for your journey to work for the month, but one morning meet a business colleague who travels first class and decide to join him for the journey. Do you think the guard would waive the fare increase, because you are a regular and valued traveller?
Almost none of us would expect to get any of the above for free, and yet so many accountants believe that clients will (and sometimes do) get upset if we were to try and charge for extra work. Why is this?
Probably the biggest single reason is our failure to set out clearly and unambiguously precisely what is and isn’t involved.
You’re in the middle of an audit. Before you started, the client asked for a quote, and used quotes from other firms to maintain the fee at last year’s level. He agreed to ensure that the bank was fully reconciled, and that routine accounts issues like the posting of depreciation would be dealt with.
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When you arrive, you realise that although the bank has been reconciled, they haven’t posted items on the statement not in the bank account. Do you adjust your fee?
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Depreciation has not been processed. “But you’ve always done that before,” says the bookkeeper. “I assumed you’d be doing it again this year. It only takes you an hour.” Do you do it? Do you charge?
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The client asks you to analyse motor expenses in more detail than before, to help him control cost. Again, do you do it? Do you charge?
Most businesses (and some accountants) charge their clients for extras, or set an all-inclusive fee at a level where they make profits on those who use it to the full, and super-profits on those who don’t. There is no inherent contradiction between a commercial pricing policy and providing good client care.
The trick is to set out in sufficient detail what is included in any fixed quote. You may want to set a level below which you choose not to raise an additional fee, or increased fee. However, if you do this, don’t set the level too high! Don’t give away your time and expertise. It’s what you’re in business to sell!
To counteract these issues accountants must agree the scope of their work with clients:
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Discuss what is and what is not included in any fixed quote.
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If the client agrees to “help” by doing additional work or improving the books and records as part of negotiating a reduced fee then price each part of that agreement.
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Suggest additional work that you could do to help the client, and how much it would cost.
If the assignment encounters problems, such as the records not being ready or promised work not being done, discuss it with the client BEFORE you spend the time. If the client agrees to you doing the work for the agreed revised fee, it is difficult for him to argue later. Conversely, if you try to spend the client’s money for him without discussing it, don’t be surprised if he gets upset when you present him with the increased fee.
If you are already doing all this, then well done. However, our experience is that you are in the minority!
Mike Sturgess
SWAT UK Limited