I have a client who I think is just asking for too much in terms of explanations. To the extent I feel I am teaching him tax and accountancy. Having said this I may be wrong and client is perfectly reasonable. This is where Any Answers response will be a real help.
I had a meeting with the client in question today. Here are some of the questions raised by the client:
- Explain how my tax is calculated? Both corporation tax and personal tax.
- Explain the detail of dividend and salary balance?
- What reports can I get from Xero. Explain what each report means?
- Why are certain items of expense not included as deduction from property income?
When I read the above questions it does not look that bad. It just took a long time to go through all the explanations.
Any thoughts on this? How do you handle client like these?
EDIT:
This is a fixed fee client. Our meeting went on for 1.5 hours. Various issues were discussed in the meeting. At least half of the time was taken up in explanations.
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Replies (16)
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Is he willing to pay you for your time?
If he's willing to pay you for extensive explanations, then there should be no issue.
The problem comes when you're on a fixed fee. In that case, I should think your quote next year might be significantly higher and you would explain why. But don't hint that he is asking too many questions - it's his tax liability and his money.
How long
Non of these questions are unreasonable. How long did it take you answering them. I would think 15 mins max and a few should be in your normal accs tax return presentation
I struggle with this sort of thing too
Personally, I wouldn't have a 'cat in hell's chance' of explaining all that in 15 mins. A lot of those items would have been explained to our client anyway, but some clients want explanations over and over again and this can be frustrating.
Also, some clients don't always understand the explanations, and I end up going into more and more detail until I am sure they have correctly understood. It is sometimes quite difficult and time consuming.
The areas I struggle with are bookkeeping and VAT, where the client wants to do their own but expect us to teach them how. Would your local garage teach you how to service your own car, for free, on the provision you gave them the MOT and any big repairs? Isn't teaching bookkeeping & VAT the equivalent?
I compromise by giving them a free demo on the chosen system at the start, and we answer quick email & telephone queries, but we charge for additional training. With VAT, we usually persuade them to let us prepare the first return and then give them copies of the workings, so they have an example to follow.
If you haven't put a limit, or restriction, on what is included in the fixed fee, then you have to take the rough with the smooth.
Training by professionals
The areas I struggle with are bookkeeping and VAT, where the client wants to do their own but expect us to teach them how. Would your local garage teach you how to service your own car, for free, on the provision you gave them the MOT and any big repairs?
Interestingly, if anyone watched 'CountryFile' last evening, there IS a trend for vets to train farmers to do a lot of the routine work that they traditionally did as there is, they say, a shortage of farm vets. It apparently suits both parties. However in the absence of a shortage of accountants I guess the same wouldn't apply!
I can sympathise
There do tend to be a small minority of clients who want to try to understand the fine detail. It would be easy to take it personally and think the client doesn't trust you, but I subscribe to the view that it gives you the opportunity to enhance your standing with the client.
If you have agreed such a meeting within your fixed fee agreement then you have to swallow it, I'm afraid. However, looking at your list there you have quite an agenda of disparate matters. Some are within the boundaries that I would consider acceptable within the fixed fee remit, some are not.
Unless the client is really on the ball, any meeting over an hour is often a waste of time for both parties. I would have attempted to split the agenda into two and have two meetings - the first for matters that fall within the fixed fee and a separate optional one for other matters - eg. software training or similar - which is chargeable.
sorry but
I would consider that all these points would be standard explanations in a client meeting.
In practice you only need to explain in year one an in year two you say "you remember we talked about "
I agree with Shirleym the book-keeping is a different problem.
It's not a problem at this stage
I couldn't answer those questions in 15 minutes and I think 90 minutes is a reasonable amount of time to spend on them.
As has been said you should only have to answer most of the questions once.
Is 90 minutes going to make much different to your profit?
It's only one client so I would accept it but if he keeps asking lots of questions just raise your fees in future years.
That's just the risk of a fixed fee
You have to factor into your pricing system that some clients will take up more admin time than others.
Next year adjust your pricing to include at least 2 hours meeting time. Hopefully he/she won't have as many questions next year!
Good idea by ShirleyM / Andy Partridge to try and split the meeting into two, with "training" as an additional chargeable extra. This is particularly relevant to the Xero reports.
Not sure about charging for training in this situation
I think clients wont be happy with being charged for Xero training when Xero has been foisted on them.
@Richard
I am guessing that the vets charge for the time spent training the farmers. I am also guessing that the farmers don't expect it to be free and are happy to pay for the training if they gain in the longer term.
What reasonable person wouldn't be happy with that?
Now hang on
1. Explain how my tax is calculated? Both corporation tax and personal tax.
Why don't you give them the computations and supporting schedules with the returns? You are asking them to sign them as correct after all. We always do.
2. Explain the detail of dividend and salary balance?
What does this mean? The dividends and salaries charged in the accounts should be as per their records.
3. What reports can I get from Xero. Explain what each report means?
It is a while since I used Xero so I do not know how difficult that would be now.
4. Why are certain items of expense not included as deduction from property income?
Like what? - Because they are not allowed?
Re Question 3 - Xero reports
Why not turn it on its head and ask 'what reports do you need?' That way if they just want a P&L you can give them pre-written guidelines on how to do it. Or better still have pre-written guidelines for all the most usefull reports that you hand out automatically and say that if they have other requirements to let you know. You look pro-active and helpful, and you don't waste time again and again....
And I agree with Chris on giving copies of the tax comps automatically with a quick explanation of the main calculation in your issuing letter - 'taxable profit per the accounts, adjusted for x, y and z. Tax at x% blah blah'
I'd also pretty much cover the answer to Q4 in my issuing letter to save questions after.
Which only leaves divs / salary - if they're on personal allowance salary I'd include that in my issuing letter and say that the balance of what they've taken is divs or if they take a 'proper' salary they'd know that anyway and I'd possibly mention divs in terms of '£x divs were taken during the year that need to go on your tax return blah blah again'
Wow, I'm almost efficient here! The trick is to avoid them wasting your time by pre-empting all possible questions and getting it down in writing in words of a syllable or two. No need for meetings if you've already covered all their points :)
Edit - and as I've costed the time to write the letter (well, email) into the fixed fee I'm not 'losing' money or time.
I agree with Flash - most of this is standard practice
We always have a sign-off meeting, and we give clients copies of the tax return, the calculations, the backing schedules and we talk them through the lot before asking them to sign.
This has a dual purpose, ie. if you explain what has been added back, and why, it helps the client going forward, and the client also gets to confirm correct treatment before the tax is submitted. Explaining the tax comps, and informing what payments are due, and when, also saves time later on, and I tell them to check the HMRC statements against my calculations and let me know if they differ.
Flash's idea re the Xero reports is excellent, it will score brownie points with your clients, and save you time, too. A win-win for everyone.
Scoping
It sounds to me like the problem here is like most problems, not enough work was done at the beginning.
You should always fully understand what the client wants from an engagement and define it before you agree a fee. Are you guilty of selling accounts and tax returns when the client wants to buy something else?
When you know what the client wants the key is then helping them see the value and pricing the value with a range of options/price points. This can/should include defining what is not included.
I would recommend explaining the tax as standard as most clients would appreciate. I used to do a summary of the difference of their profit to the final taxable profit and then explain the tax.
Bob Harper
Xerox reports
I think Flash has the right idea about the reports. A large list scares most clients. If you think about what clients need you can tell them which reports are useful to them.
You can tell them they may be better off exporting a debtors outstanding invoice list to excel so they can chase clients and make notes of phone calls on the spreadsheet.
Reports
@Peter - I know you enjoy sayings so here's one prescription before diagnosis is malpractice.
Instead of telling the client what reports they need, how about asking them about what they want and what is important? It would also help if you understood why what they want is important - maybe they could use Spotlight with Xero or monitor non-financial numbers (KPIs).
As regards debtors, you can make notes in Xero and consider using Debtor Daddy.
Bob Harper