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£9m turnover potential client

£9m turnover potential client

I had a potential client meeting today whose £9m turnover nearly through me off my chair.  I was not expecting a client like this to come and see me. 

She appears keen to become our client. Before I make my decision to take her on as a client, I would be grateful for people'sviews and experience of a tiny practitioner like me taking on a client that would be the biggest on the books and the second biggest would be a few million pounds down the list. 

Are you a small practice with a £9m or higher turnover client?

In terms of the workload we can cope. I will be taking on a UK based bookkeeper. Audit would be undertaken by another firm.

Thanks

Replies

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02nd Jul 2012 21:15

.

Make sure you do your due diligence and aside from that.. why not!! You'll never grow otherwise.

The fact they are keen to engage your services is testament to your reputation and abilities. Just be aware of your "Intimidation threat" (although largely irrelevant whilst audited elsewhere).

Good luck.

Thanks (1)
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02nd Jul 2012 22:20

Income Lebel

As long as you are sure you are well equipped to take on the job, i cant see any reason. The only think you should consider is what percentage of your turnover will this single client represent. Will it be in line with your professional body? 

Thanks (1)
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Paul D Utherone
02nd Jul 2012 22:56

.

orchardacc wrote:

As long as you are sure you are well equipped to take on the job, i cant see any reason. The only think you should consider is what percentage of your turnover will this single client represent. Will it be in line with your professional body? 

 

I'm not sure that is relevant unless you provide Audit services. Unless of course you are concerned about the the impact of the loss of that contract on your business personally.

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02nd Jul 2012 22:31

PII

Is your cover sufficient for potential problems with this client now and in the future.  Not saying don't take the work, just might be worth considering risks and levels of cover needed being reviewed.

Regards

MtF

Thanks (1)
02nd Jul 2012 23:42

Consider the business not just its turnover

I've dealt with £1M turnover businesses that were more involved and gave me far more grief than £20M turnover companies because of their structure, type of business and methods of working.(or lack of them).  The £s in turnover may not be that relevant (they may only sell 9 items a year at £1M each) so look at the transactions, staffing and, if "large" in bodies, whether you are dealing with key decision makers.

In larger organisations, even if you are dealing with a key director, it is sometimes important to make sure that the board as a whole get to know about issues that arise.

If you are happy that you have anticipated all they will need of you, have a comprehensive engagement letter in place and that the work won't unduly effect your ability to service other clients then you should be fine, just make sure you broarden the width of the columns on your spreadsheets!

 

 

Thanks (3)
03rd Jul 2012 10:06

Medium-sized company?

Two points:

Obviously, £9M turnover breaches one of the small company thresholds, as well as requiring an audit.  Do the total assets exceed £3.26M or the number of employees exceed 50?  If so, the company will not be small and you will have to prepare medium-sized company accounts under the full FRS with a cash flow statement and other more onerous disclosures.  Can your system of preparing final accounts cope with this?  Do you have the expertise to handle this?A separate auditor will have to duplicate a lot of your work on the accounts in order to satisfy himself that he is prepared to put his name (and these days, it is his personal name, not just his firm's name).  It will cost the client more than asking the auditor, who will probably also have the expertise and software to produce medium-sized accounts, to both prepare and audit the accounts.

 

Thanks (1)
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By neileg
03rd Jul 2012 10:39

Another way

When in the past I have been asked to act in these circumstances I have agreed if taken on as an employee. This reduces your legal liability dramatically and I have found has given more 'clout' both in the business and with their suppliers and customers. Usually I have been made Company Secretary which gives you a quasi directoral authority without the legal liabilities. I've done this for about a dozen companies at various times.

Yes I know that you've got to pay tax under PAYE but you can still get your practice to absorb your expenses

Thanks (1)
03rd Jul 2012 11:26

VT Final Accounts (which I think FT uses) is supposed to have a "Medium/large companies template (based on UK Financial Reporting Standards)".

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03rd Jul 2012 13:29

lots of issues

1) Difficult to maintain a close relationship with a number of directors or shareholders. For example, if there are outside investors who you never meet, what if the business fails and then they look for someone to sue? Much less likely to happen if there is just the one or two owner/directors where you can manage the relationship much more. I mention this as it's just a risk factor to be aware of.

2) Difficult to offer value for money where you do a/cs prep and other firm does audit.

3) In general, a larger business will throw up different technical issues than your smaller clients. When you get up to speed on say use of home as office for one small client, you can use this knowledge for all your other small clients. When you have to get up to speed on say, issuing preference shares, or medium-sized accounts reporting, or demerger, etc, etc, are there any other clients where you can capitalise on what you've learnt? I suspect not.

4) If the fee is large (absolutely or as a % of your GRF), you will end up always having to prioritise this client's work to the detriment of your other small clients, even the "A" ones. It can end up skewing your practice.

BUT on the other hand, if you want your practice to have lots of these "big" clients, then you have to start somewhere!

Good luck.

 

 

Thanks (2)
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03rd Jul 2012 22:40

Congratulations!!
First of all - well done! A client of that size is a nice boost to your fees.

Without sounding too negative, do you know why they chose (or will choose) your firm over a larger firm with more clients like them?

I ask because if you use the Mercia accounts pack, one of the questions is presicely this and I believe it is all related to money laundering.

We have in the past taken on large clients who are much bigger(£10-£15m t/o) than our typical client (£500k -£3m t/o) and it had not been worth the hassle. They expect everything, and are often less appreciative of your knowledge and skills because they know they are your biggest client.

Hopefully your experience will be better and I really wish you well with this.

Thanks (1)
04th Jul 2012 23:23

Why?
Thanks for a varied response. I found it helpful.

I have not asked the potential client the why question yet,

I am getting positive vibes from the potential client but not yet a firm commitment. I hope to know by the end of next week where I stand.

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05th Jul 2012 00:38

Delete
I

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05th Jul 2012 06:40

Ask

I always ask why they are leaving their present accountant but that hasn't been mentioned here.

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gorge112
05th Jul 2012 11:25

agree with Peter

Yes, it's always a good idea to ask why a prospect is looking to change accountants. You get a good idea then of what the client is looking for and you can decide whether you can deliver what they're actually looking for: lower price, partner availability, responsiveness, tax planning, etc.

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