Company is very small but is VC backed so is required to produce audited accounts. No stock, only about 20 transactions per month.
They also need monthly management accounts produced from the books (which they maintain themselves), so will require work throughout the year.
I've costed it all out and am coming to a figure of £4-5k, to include VAT, PAYE, monthlies, annuals and audit.
How does that sound to you? I'm thrown because it's an unusual one. My gut feeling is that it's high, but I believe they are paying more than that currently.
Thanks for your thoughts.
Replies (11)
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The audit does it for me
I've recently given up my audit registration but got to the stage where anything that needed an audit, no matter how small, started @ 3K.
This is a personal thing but I have avoided monthly management accounts for years (much as I would never undertake weekly payroll) feeling that quarterly numbers were far more meangingful and capable of being properly prepared. But if the client insisted and the books were OK I'd quote £4,800 pa for these and the VAT.
I'll stop there but, as you can see, I think you may be short selling yourself. You don't say what other sort of work/fees you charge, ie would this be a big one? But it is always worth seeing it from the client's perspective, there is a lot of work involved here, plus the audit responsibility and so, if you are unsure, always go in higher than you feel comfortable with, you can always compromise and lower a quote. Better that than surprising the client at how cheap you are.
Good Luck
I agree with Paul
Without asking lots of extra questions, such as what system they currently use, turnover of the business, of you would include a 2 hour meeting each month to go through the figures with them, and what you perceive the audit risk to be (my feeling is that this is high because of the responsibility you have to the VC) then I would suggest the following :
Monthly managements - £3,000
Meetings regarding the above - £2,400
Audit - £3,600
Others (VAT,PAYE etc) - £1,200
Total - £10,200
Obviously I don't have all the facts, so this is just a suggestion of what I would expect the fee to be. Definitely worth more than £5k - imagine the extra costs you will incur in PI, audit manuals, CPD, practising certificate etc just for this audit.
One thing that crossed my mind when writing this is, of you are preparing the monthly management accounts, are you prejudicing your independence in relation to the audit? Do you have the opportunity to use separate teams?
Depends how busy you are?
If you are building a client base the £5k quote, top end of your range, seems OK but I'd not be inclined to go lower than that.
No disrespect intended but I am surprised a VC backed company would instruct a new practice. Do you yet have the OK from the VC backers?
Good idea Sarah
I think that the accounts preparation work only would be a good idea - protect your independence and lower your risk.
Do you use VT for statutory accounts too? I'm not sure if it will have all the necessary audit reports etc for a business like this, but maybe I am wrong.
If you do just the accounts work, I suggest you then try to offer some additional support in terms of quasi FD type stuff, and quote them £5k. At least you then get the fee you first thought of, but with less hassle and also less costs.
Please let us know what you decide to do, and if you are able to share the fee you get (assuming you are successful) that would be really interesting.
Best of luck with whichever route you take!
What's It Worth To The Client?
What would be the consequences of the client having nobody do any of this work for them? And the knock on effects of that? etc. etc.?
Getting the client to consider all these thoughts would lead them to an appreciation of the worth of having the work done, which they can then share with you. If your fee presents the client with a 'bite your hand off' RoI for deriving that value and simultaneously presents you with a 'bite your hand off' RoI for your investment of effort, then everyone is happy.
I would suggest 'bite your hand off' starts at around ten times. So if the value exceeds £50,000 and you can do the job for less than £500 of costs, all is fine with a £5,000 fee. If not you'll need to probe for more value and find a way of delivering quality work at a lower cost in order for the price to be both compelling and profitable.
David Winch
Well done Sarah!
That doesn't seem unreasonable - and much lower risk so you get the best of both worlds!
Did you go for the quasi FD service too?