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Should You Reduce Fees For Good Bookkeeping ?

As a relatively new practice, I still struggle with setting fees! I struggle to distinguish between pricing for a client where the client does his own bookkeeping,(by that i mean keeps basic records, maybe a spreadsheet, but no bank recs) and I prepare the Company Accounts, compared with a client who asks me to do all his bookkeeping, plus the Company Accounts .

My question is, if you take on a clients bookkeeping, where you obviously set a lower hourly rate,  do the work, which might result in a bookkeeping fee of approx £250 per year (say based on 12-15 hours work per year), But then how do I reflect this in the final bill for his limited company accounts ?

Adding the bookkeeping fee to the standard fee for limited company accounts might seem to make be expensive in the clients eyes ? On the other hand a reduction of £250 from the final bill would just wipe out the profit, and would mean a lot of hours spent for not a lot of fees!! Is there a balance in the middle somewhere ? Or would you just cost the final accounts based upon a reduction in the hours work required becuase of the improved quality of the books!

Any guidance appreciated.

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That's how I do it

Think you have to turn your approach on it's head.  Look at the accounts in the same way that you would two clients identical in all respects other than their record keeping.  Client A brings in a stunning set of books, Client B an iffy set that will need some correction & reanalysis.  How much would you quote A & B?

The bookeeping work is slightly different because clients can have a stab at it themselves and you can (should) coach them to do it better.  This falls into the realms of how valuable the work is to the client, ie client A, who is pretty good at bookeeping but who finds it a bit boring, might not be prepared to pay anything like the fees you can charge client B who hasn't got a clue and thinks you're brilliant at being able to reconcile a bank. 

Whilst we don't keep time sheets we have a couple of clients like this where we probably charge £20 ph for one and £50ph for another.

This is a common problem and one that made me realise years ago that with the real value of our work being in accounts prep & tax, we would only do bookkeeping if the client begged or if the work was so easy we could just tack it on for a nominal fee. 

I've found that the best route for most clients is to set them up with the set of books that best matches their abilities, charging them in the initial initial stages for coaching and support.

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17th Jan 2012 08:39

As Paul does

We don't so much reduce fees for good bookkeeping, we increase it for bad, or non-existent, bookkeeping.

That way they can see how much they could save if they presented good books to us.

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17th Jan 2012 10:10

Charge extra for no or poor bookeeping

I agree with the others.

The main problem is people who just cant be arsed at all. It is pointless showing them anything. Just do it and charge them, or get rid.

The other problem is some clients who are willing but have a  lack of computer skills.

Even rudimentary schedules in excel are useful as you can cut and paste. The same provided on paper are just lists.

 

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Different services, different fees

I quote fees after discussing the quality of accounting records with a client, if the client doesn't do anything all year, then the fee I quote includes a figure for bookkeeping.

If the client says he keeps his books up to date - posts and reconciles the bank, matches payments and receipts etc I quote accordingly, saying that the fee is quoted on the basis that the bank account is reconciled etc etc.

If when I get around to doing the accounts and find that the bank hasn't been reconciled I will charge extra, I always discuss it and get agreement in advance before doing the work though.

There will always be cases where, as Paul says, you charge different clients different fees for essentially the same service, the key is to keep them happy and make a profit.

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17th Jan 2012 12:01

Charging extra

I have a good quality client where I quoted a low figure for tax based on good quality schedules from Excel.

I didn't check their understanding of what a bank rec was beforehand and had to do the bank rec myself, consequently adjusting the schedules for missing items. I should have charged at least £250 more to cover the amount of extra work I had to do, but didn't because I blame myself for not doing more investigation before quoting.

I will be spending more of my valuable unpaid time explaining to them how to get their schedules for 2012 set up accurately. They are very willing and able so the end result will be good. I have already said that regrettably I would have to charge more next year if this isn't done, but they are nice people, and understand.

They will pay me to train them on a new book-keeping package going forward.

I am so used to doing all the book-keeping myself that it is quite difficult to work out a fixed fee for sorting out this element. Although I have only myself to blame, it has been quite tough working so many hours for nothing.

I think KentAccountant's approach is spot on, and if I can just estimate time a bit better up front, this should work for me.

 

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By thacca
17th Jan 2012 18:10

don't do bookkeeping cheap
Your 250 per year for 15 hours per year equates to 16 per hour. Do you want to work for that as a self employed qualified accountant? I would suggest you will get a job for that be paid holidays and won't have the risk of running your own business.

Looking at it another way if you didn't do the work yourself but employed a qualified/experienced bookkeeper to do the work would you make money that rate. Again I'd suggest not.

Price bookkeeping at the price that's suits you and if clients think that's too high turn it down.

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20th Jan 2012 11:23

It's always a good idea

for the client to do their own bookkeeping and we try, where possible, to train em up to that end.

Where we think the client doesn't have the time nor the inclination we take on the whole job ourselves. In those cases we set a fee that the client is happy with and charge them quarterly, which includes Accounts, returns etc. Fees are simple. Your staff do time sheets and you charge 3 times their rate. One for them, one for admin and one for profit. Your rate is what you want. If you are really unsure then agree a fee with a client for the first year with the proviso that the second year will reflect the actual time spent.

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20th Jan 2012 13:16

Give them ABC Accounts Books

These cost £8 each, which is minimal.  Other Accounting Books might cost around £18.  Give each client one FREE (as we do).  Explain to the client that they are merely copying (from Bank Cheque books, Paying-in Books, cash paid receipts, etc). 

By keeping it simple, you get:

a) the client on board

b) good records - that can be defended against any Revenue attacks

c) swift preparation of Financial Accounts

d) retire early - so that you can answer questions on Accounting Web

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20th Jan 2012 14:10

ABC Advertising

MartinLevin wrote:

These cost £8 each, which is minimal.  Other Accounting Books might cost around £18.  Give each client one FREE (as we do).  Explain to the client that they are merely copying (from Bank Cheque books, Paying-in Books, cash paid receipts, etc). 

By keeping it simple, you get:

a) the client on board

b) good records - that can be defended against any Revenue attacks

c) swift preparation of Financial Accounts

d) retire early - so that you can answer questions on Accounting Web

Shameless plug  - you forget to mention you are designer of these books! 

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20th Jan 2012 15:37

ABC Accounts Books - via Emandee Publishers

In response to "Big Bad Wolf's" accusation of a "shameless plug", is it not more relevant that for a mere £8, any Accountancy Practice can save time - and aggravation?   I designed these books back in 1979.  So many Practitioners bought these, and one even wrote to me saying "you've got round to doing what we have been thinking about for years - thanks".  The fact that I can assist small practices because I took the step, rather than dismiss requests from others, speaks volumes.

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20th Jan 2012 15:00

Free

Give them VT Cashbook ... this doesn't cost you anything at all ... not even 8p :)

It is a doddle preparing accounts from VT ... much easier than from manual books.

EDITED to correct a 'fingers not connected to brain' error ;)

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20th Jan 2012 14:34

Agree with you

Shirley M VT is, in my book, by far the best. Everything in our office goes onto VT. We even have clients who have bought the licence through us.

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