I have client who is not happy.
I had signed engagement letter with client back in 2011 when the company had a turnover of 33K. I had charged around £1,500 for the Annual Accounts and CT600. Turnover suddenly jumped to 1.4m in 2012 and had a transactions with its group companies overseas. .
I did state the charges in an email before I had completed the Accounts and Corporation Tax Return via email but received no reply. I had charged £2,200 last year - turnover was 1m which he didn't complain and charged the same this time round. Its not that I was trying to hide anything from him
I had sent my invoice last week and he said I should go by the old engagement letter so charging £1500.
Always had a good relationship with the client and had gone out of my way to help them and they have been extremely happy. For example we had filed the accounts this time around on the deadline day at 11.45pm due the client being slow to respond and have calls with them quite often around midnight due to the time difference,
My concern is two fold A) I might lose this client which will be an almighty blow (as it is my biggest client) B) He may have lost trust with me going forward as the plans was to give me more work and have new engagement letter signed with agreed fixed prices.
I have written trying to justify the charges and have offered to go by the old engagement letter even though I have spent a lot of time on the accounts as my focus is to retain the client not the money really.
Replies (100)
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So,,
Your fees have gone from £1500 to £2200 and his turnover has increased 42 fold...Sometimes you have to accept that clients will never be happy with increased fees you have to be prepared and walk away.
Autrefois he'll walk all over you.
Agree
stick to your guns, and don't go beyond justifying it. Your partnership needs to be mutually beneficial, and if they have any sense your client should appreciate that. You have proved your professional commitment to them on multiple occasions, but if they are querying your fee despite knowing it in advance, their sense of fair play is in question.
Your client is taking the [***]. You know it and he knows it.
It will continue as long as you allow it to continue.
If the client respected you, and the work you have done, he would understand the increase and pay you with a beaming smile.
I can't understand why you want to keep them
I have written trying to justify the charges and have offered to go by the old engagement letter even though I have spent a lot of time on the accounts as my focus is to retain the client not the money really.
You want to keep an unappreciative unhappy client?
Is there something special about this client, eg. lots of referrals from him? If so, a referral that says you'll bow under pressure may not be worth having.
[***] client
Can't add any more to what has already been said really.
It seems like you have agreed to revert back to the 2011 fee.
One thing I can add, however, is that you must not under sell yourself. It can be difficult and I have done exactly the same thing in the past. It comes down to confidence. Have confidence in yourself and in what your services are worth. If you undervalue yourself, your clients certainly will follow suit.
I understand he is your biggest client, but it is true that there are plenty more clients out there, most of which will be happy to pay you a mutually fair fee.
And remember, you can always tell him "On reflection, I am sorry to say that I won't in fact be able to reduce the fees in line with the 2011 engagement letter. I have carried out a cost analysis and even the £2,400 fee comes in below my standard minimum charge out rate, however I was and am willing to keep the fee at last year's level, in view of our [previously] good working relationship".
A practical point
Why specify fee level for annual compliance work in the engagement letter? That is asking for trouble. At the very least it ought to have stated that fees would be reviewed annually but preferably dealt with outside the EL.
Are you mad?
All that hassle for those fees? You could get two contractors that are hassle free and make up the fee.
You really are making a rod for your own back.
Just an idea... may be focus
Just an idea... may be focus on marketing and getting more clients to cover the lose rather than gettting worried about losing clients. Clients will come and go for various reasons. If the client don't appreciate the service that you're providing them then they'll complain. Alternatively it may be that they don't understand the work that you put in to provide the service to him.
I had an experience where the client questioned the monthly fees that he was paying us. He needed to be explained clearly numerous times all the service that he will be getting and when the month we do CT600 and accounts the charge is still the same.
All the best...
The fact he paid you the increased fees last year shows he accepted the new terms. Is there other work which you have carried out during the year which you could add to the bill? There must be loads of tax issues if there are transactions with overseas group companies.
Make sure that you charge for everything else at your hourly rates. Or have you already billed for this and that is why client is being difficult?
Be pragmatic
You should not allow yourself to be pushed around by clients. Be firm when you need to be or you will ended up being bullied and working for nothing.
Having said that you don't want to cut off your nose to spite your face so you need to be pragmatic. As this is a valuable client to you the way I would play it in your shoes would be to perhaps take it on the chin this year, but spell out exactly what you do, why the existing fee is unreasonable and your proposed fee structure moving forwards.
Next Year
And what will you do if he comes asking for a fee reduction to, say, £1300 next year?
Be honest - is this REALLY working for you?
You've obviously been trading a few yrs now as your first EL was back in 2011. With that in mind, is business really progressing as it should if the loss of a £1.5-£2k client is going to hit you this hard?
I kinda get where you're coming from but 3-4 yrs in I think you should be in a better position by now, £50-75k fees where you're constantly gaining more new clients than you're losing.
If that's not happening, which it quite clearly isn't, i'm not so sure you're cut out for running your own practice.
I doubt he'll get anyone else to do the job at that fee rate. Tell him to seek an alternative and wash your hands of the ungrateful pig. Also after this you will not trust him going forward which would destroy the mutuality essential for a accountant/ clieent relationship
Looking at your previous questions, you don’t seem to have attractive clients. Each time this has been pointed out to you, you say that you are not in a position to pick and choose.
Bad clients will attract more bad clients.
You really need to look at what is attracting these poor quality clients to your practice.
Even your 'higher' fee is very low
I doubt anyone else would touch the work for that fee, so you have nothing to fear from your client getting alternative quotes. It may make him more appreciative, too.
I think your uplifted fee is reasonable.
Especially when you throw in the Euro account and the trade via India.
Personally, I wouldn't even entertain letting them wind me up.
Get your cash - Disengage - Put your feet up
I feel your pain
It is a difficult situation to find yourself in. All the above responses are probably correct but may be easy for them to say as they are likely to have established practices but when you are fairly new and especially as a sole practitioner trying to build up a practice you need to have the confidence to stand your ground. Maybe as an interim measure you could offer to compromise and split the difference for this year on the understanding that future years will be charged at a rate more commensurate with the work that is needed.
show the client the door, never be afraid to do this. You are at a low ebb - the trust and respect is decreasing . Overseas transactions - that's £3000 fees all day long .
Believe me , its very difficult to motivate yourself and remain 100% focused on the job , when deep down you know you are being underpaid. This compounds itself and gets worse as the job will take longer.
I rattle out jobs for clients that appreciate my efforts, professionalism and pay me well.
Most of us have been through it
I do understand your position @taxwizard. Most of us on here have started practices from scratch and been through times when all we've seemed to attract are the fee cutters and timewasters. I did it too!
When I first started I went to visit a very well respected friend of mine who'd grown a practice from nothing into a substantial firm. He offered me loads of advice and I remember him telling me "Don't underprice or undersell yourself. Clients actually won't appreciate you, you'll hate working for them, they won't respect you, and then they'll leave when someone else does it for less."
He was right...but guess what? I ignored the advice.
A few years later I was scrapping around for bottom end clients who wouldn't pay for anything or who insisted on rock bottom fees. They were an awful bunch to deal with.
Then there was a straw that broke the camels back, I grew a pair and it's all changed for the better (mostly)
I guess what the other commentators on this thread are doing is helping you learn from their mistakes. Most of us have made them all and I often think "what if I'd listened to my friend at the beginning"
Your lack of confidence will come across to clients, they'll know you are desperate for the work and will do it at any price.
Learn how to be more confident and learn how to price properly and stand up to fee cutters. I promise you, you'll thank yourself for doing so in a couple of years
Take the £1500
& invest it in a good website & SEO (borrow a bit as well as you will probably need £2.5k to nail it). Get yourself into the top 3 for google maps in your area. In 6 months time you'll be able to TELL him it's £2.5k and if he doesnt like it he knows what to do.....
If you use somebody who knows what they are doing
it is easier than you think. I spent less than £500 and went from page 5 to top spot inside 6 months. Im in a large town in the North West and probably have 50ish competitors in the same radius. Have now slipped to 5th on google maps and will be addressing it again shortly to get back in the top 3.
Non productive
it is easier than you think. I spent less than £500 and went from page 5 to top spot inside 6 months. Im in a large town in the North West and probably have 50ish competitors in the same radius. Have now slipped to 5th on google maps and will be addressing it again shortly to get back in the top 3.
[/quote
Like to know how it is done. I think I am probably somewhere on the 10th page
Don't worry I've been top in my town for years and got Nil from it. I always ask new clients "why me" and 99% are from referrals or reputation ( they really can't believe it so want to check if I really am that bad)
For the brief period that i "topped the charts" in Warrington Bernard i was getting 3-5 enquiries per week. Whilst in the top 3 then 2 enquiries per week was probably standard. Currently ranked 5 on Google maps and web page comes up independently on page 1 and im getting 1-2 enquiries per week. Re-jigging planned for the next couple of months to get back in the top 3.
Possible answer
For the brief period that i "topped the charts" in Warrington Bernard i was getting 3-5 enquiries per week. Whilst in the top 3 then 2 enquiries per week was probably standard. Currently ranked 5 on Google maps and web page comes up independently on page 1 and im getting 1-2 enquiries per week. Re-jigging planned for the next couple of months to get back in the top 3.
Pehaps it's another example of the North South divide
Don't
Or set aside 5-10K and pay for cold callers and then you really will be rich?!
BUT
Hated and clientless
Noted Bernard.
I was merely offering an alternative to "get a website and some SEO".
Cold calling is horrible for the recipient. But for Mr Wizard (I'm not going to be personal but comments above include lacking confidence and low-end clients) well then it might work.
I started with nothing and just two years later, or was it three, was losing interest in going to potential meetings as I was too busy with the clients they found me........
It's an option to building a client base that's all............
Desperate?
How can being worried about £1,500 make sense? Just eat £30 worth less of food in a week. Use your spare time on marketing.
This client is leaving anyway
Just received a email from client he wants to review all the invoices I issued this year and review them if they were pre-approved or not. I already stated I would go by the previous engagement letter so not sure why this is necessary so annoying
He wanted a get-out so demanded a reduction in fees, but as you've bowed to his demand he now needs another reason to get out. This is it. You can go on forever trying to hold onto him. Get rid now, before he ends up owning you.
EDIT: on reflection, he may want to stay ... but maybe he's a [***] and takes pleasure from making the people who help him totally miserable, unhappy, and feeling like *!*!?
change of approach and being strict and biting the bullet helps!
I have just replied to him with a strong email reminding him of all the work where I have not charged and undercharged. - looks like I may ultimately end up losing my biggest client :-(
I feel for you! I had a couple of clients who were complaining. Learnt a lot from that experience.
One of the things I do is that even if I do something for no charge to clients, I tell them clearly it's free for goodwill and also try to raise invoices and giving the full discount so that they know I'm actually writing it off my books, not just some marketing words that I used. Obviously I don't raise invoices and discount it for £10 worth of work!
What do others do re work that they don't charge for/ goodwill builders?
I have a very good client who regularly wants to go through invoices, but I always have it pre-approved and I understand that he genuinely wants to understand. The problem usually occurs when you let the fees build up. I've allowed this to happen on another occassion (dealing with it currently) to help the client and no doubt we'll have a meeting to go through all the invoices which wastes my time obviously.
I hope the above helps.
I'm glad for you
You don't want this person. You seem to be desperate to keep him but he is destroying your practice.
I would start reviewing the work you have undertaken and your engagement letter and see if there is any scope for you to raise additional invoices.
Being a wimp has led to this situation. You need to stand firm now.
Biggest client?
... in what sense?
Turnover?
Fees?
Time spent?
Hassle?
Empty promises of more work?
Whichever it is, shouldn't you try to get two small clients who will take less time to deal with and generate the same profit, or more?
Stand firm
I wouldn't waste any more time on this client you really don't need the aggravation. It sounds to me like he may have been getting quotes from other accountants or speaking to the man down the pub to find out how much they pay. As we know this is only as good as the information the client gives. No matter how much you reduce the price he doesn't seem to be happy, reviewing invoices that have already been pre approved to what end? He was happy with the work you did and the price you charged at the time. How would he feel if his clients did this to him? It sounds like he doesn't trust you so wave goodbye to him your not his employee and find someone else to fill the space. Make sure you keep all your records of conversations, emails, letters etc so if he tries to complain or claim from you insurance you've got your evidence.
Solicitor fees
@taxwizard
If you want a lesson in what greedy looks like, have a look at solicitor fee models!
Had a bill come in last week from a solicitor charging 6 mins (0.1 hr) per email from my boss - many of which were one line long and would take all of 10 seconds to read!
Can your client do better?
Given the work you do, your fees are already very cheap. Your client probably knows this also. Is he really going to be able to find some to do all the things you do for less? I reeeeeally doubt it ! I can come down to you saying something like this to client (of course say it politely)
How can you be sure where you are ranked on google? (You know that you can't just put the search terms into google, right?) Is there a reliable independant ranking source?
Google ranking
Hi Tim - by searching "accountant warrington" both myself and getting friends to do it independently (so no search history). At present i come up 5th in the google maps list (- which isnt great as they now only list 3!!!!)