Unplanned workload - clients in financial difficulty

Unplanned workload - clients in financial...

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It's 'tough going' in our area, and now, a lot of small businesses that have been holding on, hoping for recovery, are now really struggling and giving up.

We have spent a lot of time helping these clients, and haven't charged for the additional time reviewing in-year accounts, or for the additional meetings. We are coping with the additional workload at the moment, but if this increases it will affect the service I can give my fee-paying clients, which wouldn't be good for my practice.

I just worry that the situation is going to get worse and worse, as even previously profitable businesses are now calling me, wanting meetings to discuss their worries.

How do you deal with this situation? I cannot abandon them, but I don't feel I can add to their worries by charging for the additional services and support.

Replies (18)

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By Steve McQueen
11th Aug 2011 10:52

a suggestion

In similar circumstances, for those who needed a lot of my time and input but who could not pay, I offered my services for a % of the business (how much of a % depended on a whole host of inponderables). Some of these paid off quite well. Some went bust.

 

I nicked this idea from my old boss who had really stuck big twice and had turned himself from back street shoe box accountant to quoted PLC chairman in 15 years odd years.

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Replying to lionofludesch:
By gerrysims
11th Aug 2011 11:20

spot on

I've done this with a few start up companies who had no funds to pay me. I'm still waiting for any of them to come good but I'm happy to work on this basis for a few clients.

Good name by the way :)

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By User deleted
11th Aug 2011 11:30

Limited amount of time for free?

I don't think there's a right answer to this one. You can't afford to give all your time away for free because if you do you'll soon be out of business yourself and that won't help anyone. But equally I can understand that you don't want to make their situations worse.

Can you tell them that you'll give them x amount of time at no cost (hence earning brownie points at least) but on the proviso that any other additional work is chargeable (possibly at a lower rate if they pay upfront - so if they still go broke you've not been shafted)? And maybe only help out (for free / reduced rate) the ones who are good clients?

I was going to suggest maybe charging for pretty much everything but saying that its only payable in x months time (except the vat if you have to pay that yourself?) or free now but normal fees will increase at a specific future point - the only problem is that there might be some who survive but then go elsewhere / won't pay and others who don't survive and therefore you're still out of pocket.

I guess what I'd do (hard-hearted s*d that I am!) is maybe do a few small freebies for the ones you like and who have a realistic chance of surviving / may not survive but will give you fees through good recommendations and say 'sorry but' to the rest. Unlike a superhero like me (!) you can't save everyone so you've got to focus your limited resources where they'll make the most difference. And you have to put yourself first because no-one else (except me, obviously, Saviour of the Universe) will.....

Good luck! 

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Replying to Balancing:
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By Jimess
11th Aug 2011 19:00

Set your boundaries

I agree with Flash - you need to set your boundaries.  I learned this the hard way a few months ago when we gave a huge amount of help and support to a client who was struggling and only billed for probably half of the time we spent.  It is a huge burden on resources and can be the quickest way to drag you down.  I have had similar requests and I always give them a free meeting of up to one hour to let them talk about their concerns.  This enables me to discern the extent of the problem and how much work might be needed.  Sometimes the answer can be as simple as helping them sort out a good credit control policy or looking at ways of cutting down expenses/costs, others might just appreciate the opportunity to talk to someone who will not sit in judgement - they probably cannot talk to their employees/families about the situation that is worrying them and talking things through with a non-involved person can give them perspective back to help them move forward.  Others just leave it too late and just want you to wave a magic wand so the problem will disappear.  They are in too deep and it is really best to cut your losses and leave that to the insolvency practitioners.  Even though they are facing hard times, in my book if they require more than just a meeting they are still asking you to undertake work for them, they would not expect to go into a shop and be given anything for free because they are facing difficulties so why would they not expect you to charge them a reasonable fee for your work.   I am not saying don't help, I do offer help when needed - just be selective, talk with them openly about how they will pay your fees, get money up front or agree a payment plan with them, or agree a (prepaid) fee with them and tell them what work you will be prepared to do for that amount.  After the last experience I would never ever reschedule other fee earning work for it - good paying work must always come first.  As Flash has already said - you have to look after your own business first.  Be selective and realistic about the amount of help you can give.

Best wishes

 

 

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By ShirleyM
11th Aug 2011 20:15

Thanks everyone for the advice

I've just had a wake up call. A client to whom I have given hours of free support and consultation is playing silly beggars. I am extremely frustrated at the total waste of my time, but maybe this harsh lesson has given me a much needed reminder that anything given for free isn't always appreciated!

The advice you have given makes a lot of sense, and in future I will give one hour maximum without payment, and anything else will incur a fee. There doesn't seem much point in taking a share of a failing business, and I don't want recommendations based on me providing hours of free consultation.

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By Top_Cat
11th Aug 2011 23:14

Which proves the saying -

- any fool can work for himself, getting paid for it is the clever bit.

 

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Replying to The Black Knight:
By ShirleyM
12th Aug 2011 06:47

... and the nice guys come last!

Being nice to people, and helping others without any thought of reward may get brownie points in heaven (if it exists!), but it doesn't pay the bills!

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By ShirleyM
19th Aug 2011 09:26

Just for info

It looks like I may suffer my first bad debt in 5 years!

I sacked the client that was playing silly beggars, and the direct debit for outstanding fees has bounced. These fees were for normal monthly services, and not for the 'free' consultations.

I should have waited until the payments had cleared before sacking them, but they wanted another meeting, and I had got tired of banging my head against that particular brick wall.

Ah well, we'll try to get payment but I'm not hopeful. At least I won't have that particular headache anymore. :)

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By User deleted
06th Sep 2011 20:41

:(

If they're down south and you want someone to go round and persuade them to hand over the cash (I wouldn't accept cheques, only used £20s) I'd be happy to oblige :)  My golf swing is desperately in need of practice!

Like you say, at least you wouldn't have the hassle of them. And when their new accountants contact you insist on payment of outstanding fees first and maybe a charge for handover info :)

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Replying to Nigel Hughes:
By ShirleyM
19th Aug 2011 10:12

Thanks Flash :)

I am sure you wouldn't have any problem getting them to pay.   ;)

The company is going to fold, so the new accountant may not bother asking for any records. We do have the right to pursue the Directors for the debt, but for what they owe us I doubt it will be worth the effort.

It's just me, getting annoyed that I've given so much time for free trying to help them, but at the end of the day it was my choice to do that, and they didn't hold a gun to my head.

I keep making mistakes ... but I'll learn from them. Only idiots carry on as before and continue making the same mistake over and over. I may be too trusting and too willing to see only the best in people, which means I lose out occasionally, but I'm no idiot, and I would rather be wronged, than do wrong to someone else. I'm sure you know what I mean. I'm not very good at explaining what I feel.

 

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By User deleted
19th Aug 2011 11:47

Not mistakes, opportunities to learn :)

I keep making mistakes ... but I'll learn from them. Only idiots carry on as before and continue making the same mistake over and over. I may be too trusting and too willing to see only the best in people, which means I lose out occasionally, but I'm no idiot, and I would rather be wronged, than do wrong to someone else

Better to be too willing to see the good in folk and be proved wrong than be too cynical to think that there might be a glimmer of good there somewhere and miss out completely!

And on the brighter still side having made this mistake you'll not make it again at a time when it could cost you even more :)

 

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By ShirleyM
06th Sep 2011 20:26

Hoorah :)

I think I may get paid!  

Our ex-client has appointed a new accountant but I am retaining lien on our records until our outstanding fees are paid. I suppose they could try and manage without them, but it will probably cost the client for the new accountants additional work to manage without them, so either way I will get some justice :)

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By User deleted
06th Sep 2011 20:42

Woo hoo!!

You must be well chuffed :)

I love a happy ending!

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By The Innkeeper
07th Sep 2011 07:06

Warning

If it is a Limited Company you cannot excercise a lien over the accounting records ( as advised by ICAEW) - the only records you might be able to hang on to are the Statutory Records if the RO is at you

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By ShirleyM
07th Sep 2011 09:54

Thanks for the warning

But I am adamant on this. If they can afford a new accountant they can afford to pay me the small amount of outstanding fees for services already received.

They could always take me to court .. due to my participation on AWeb I have been threatened with court action so frequently that the threats have ceased to worry me.

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Giraffe
By Luke
07th Sep 2011 10:14

Good Luck

I hope you get your money.

The whole episode shows that when we put a lot of extra time and effort into some people free of charge because we're doing the right thing, they don't always appreciate it.

I have one particular client who is a PITA, needs handholding through everything, I quoted low fees initially due to very low activity and him being a start up.  Quarterly VAT returns at £50 hadn't been increased in 3 yrs and I end up reconciling everything and correcting so much that I should have been charging over £100.  After Q3 this year I told him I was having to put the price up to £60, nominal but an increase on principle, he was not at all happy but I stuck to my guns. 

When I next saw him, he said he was going to get his wife's mate to do the year end 'books' (limited company and wife's mate does a few 'books'!).  All because of a tenner!  P***ed me off no end so I told him how naffed off I was as I'd already done lots of the work for the year-end throughout the year.   It turns out later that he had no concept of all the additional work I'd put in behind the scenes because I'd never explained it to him - my fault I guess and a lesson learnt.He is shutting down the company anyway so I offered a slightly reduced year-end fee (after all I've already done lots of the work so I might as well get something).  That said I'm still waiting for the cheque for the first £60 VAT return which is due today...

Sorry for the rant, it just rung bells that the ones we try and help out often don't appreciate what we're doing for them and I certainly need to spell out my efforts particularly if I'm not charging for them.

 

 

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By ShirleyM
07th Sep 2011 10:28

@Luke

You have my full sympathy, but it is true that we allowed the situation to arise.

I still kick myself over this client, because he liked having lots of consultations, and when we were first appointed the additional consultation was built into the quotation, and paid for.

Over the years he decided he didn't need the additional consultation so we removed it from our quotation. You can probably guess the rest ;)

Never again!

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By carnmores
16th Sep 2011 14:33

steve mcqueen

taking a share in a clients business more often that not creates a conflict of interest

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