Help me quote this....

Help me quote this....

Didn't find your answer?

Evening all

I'm about to quote an ongoing fixed fee for a new client who I fear may provide some resistance once he sees the figure.  Full bookkeeping and accounts required for a limited company as follows:

Purchases: 300-400 purchases a month consisting of 10-15 main supplier accounts to reconcile + various adhoc purchases

Sales: £125-150k turnover pm split across bacs (minimal), merchant, Amazon, PayPal (website store and eBay) as well as 5-10 sales made on finance each month

Banks: Current a/c, savings, credit card, PayPal & merchant all to reconcile

Payroll: 5-8 staff paid monthly depending on the time of year

Quarterly VAT

Annual company accounts

2 x director SA's

Ongoing regular support and tax planning

Up until now the client has run everything on a spreadsheet with a rather unscrupulous accountant somehow winging together the VAT and year-end (a year-end that has never included the PayPal balance for example or the merchant debtor which is usually £100k+ at any one time!)  We've spent a fair amount of time already unpicking the past 18 months bit by bit and we're still not finished, the mistakes are nothing short of horrendous quite frankly.

The business is growing constantly (Google/Bing spend alone of £10k+ pm) but the client has been used to a ridiculously low fee historically hence my concern.  As above, we've been working for the last few months on a loose agreement to see how it all pans out on which we'll have made a loss (something that doesn't bother me in the grand scheme of things). However, with the first (finally correct) VAT return having just gone in, the next year-end upon us and a busy time ongoing we need to put a fixed fee in place so we can move forward.

Keep it clean if you will folks - there's a good chance i'll show the client this thread once he grumbles!!

Replies (27)

Please login or register to join the discussion.

avatar
By adam.arca
09th Dec 2015 20:37

That's a lot of work!
I haven't done regular bookkeeping for a client for years now so am unsure how long that will take.

But completely off the top of my head, you've got to be looking £10k+, surely?

Thanks (0)
avatar
By Sheepy306
09th Dec 2015 21:06

You show us yours
It appears to me that you've been heavily involved in the clients business records so presumably you already know how much work is involved. On top of that I've no idea how you normally price your work, what your charge-out rate is, what staff you assign the work to, what software package you've got the client onto etc etc.

I don't deal with clients in that sector so can't give an approximate quote unfortunately,

Good luck though. I'd suggest that you think about putting a positive spin on how you can take away all his troubles etc.

Thanks (0)
avatar
By Anne Robinson
09th Dec 2015 21:56

Unfortunately
Once you have cleaned it all up he can get cheap quotes elsewhere to continue your good work.

Thanks (0)
By petersaxton
09th Dec 2015 22:16

Why make a loss?

when, in the grand scheme of things, the client will expect you to make another loss because that's what he likes about you.

Thanks (0)
Logo
By marks
09th Dec 2015 23:13

off the top of my head

Would be thinking would be somewhere about £10k - £15k per year.

Though expect would be unwilling to pay this if are price sensitive and used to low fees.

Thanks (0)
avatar
By wilcoskip
09th Dec 2015 23:27

marks

£10-£15k sounds about right, veering towards the upper end of that, and that's only if you've got some really good systems in place.

In terms of selling it, I'd say that it's a lot of expertise and service for less than the price of a full-time member of staff.

 

Thanks (0)
avatar
By cparker87
09th Dec 2015 23:34

eh £15k??
Does the business have a book keeper or any internal finance staff? It sounds that they don't. 3-400 purchase invoices per month, £150k sales? 8-10 HP sales?

This is week to week work rather than month to month. For that reason my starting price is £25k.

Crikey. £2m turnover company with no finance support.

Thanks (1)
avatar
By cparker87
09th Dec 2015 23:38

further
You can rationalise such a price by stating that they need some frigging finance staff (that is £15k at minimum wage) and you are, in effect providing that function, too.

Thanks (2)
avatar
By wilcoskip
10th Dec 2015 08:03

Also....

....just take a few minutes to ask whether this is the type of work you want to be doing.  If you're set up well to do this type of work, then it can be profitable for you.  However, you might find yourself sucked into the position of being treated like an employee very quickly if you're not careful.

Thanks (0)
Out of my mind
By runningmate
10th Dec 2015 08:16

Your firm's size

I would suggest that you don't take this client on if the fee is going to be more than about 2 - 3% of your firm's gross fees,

They will most likely be a pain & then leave causing you grief if they are a significant client to your firm.

RM

Thanks (3)
By cheekychappy
10th Dec 2015 09:16

Bookkeeping (processing) £250.00
Bookkeeping (queries) £50.00
Bookkeeping (sales invoices) £37.50
Bookkeeping (reconciliations) £37.50

Bookkeeping total per month £375.00

Bookkeeping total per annum £4,200.00
Annual Accounts and Tax £1,450.00
VAT Returns (4 x £95) £380.00
Quarterly Management Accounts £1,000.00
Payroll £240.00
Ongoing support (2 hours per month)£1,800

Total £9,070.00

Notes and assumptions:
(1) 90 seconds per transaction to allow for queries
(2) Based on 400. A growing business is only going to be nearer the 400 mark, rather than the 300 mark.
£25 per hour
(3) Annual accounts and tax price to include SA returns if just usual salary dividend and maybe savings.
(4) You don't mention management accounts, but I think they should be prepared for a business this size.
(5) Would review after 3 months in and adjust either way if necessary.

Thanks (3)
By cheekychappy
10th Dec 2015 09:24

On another note
I’m not surprised the accounts and VAT were total crap. Why on earth would an accountant carry on letting the client use spreadsheets for a business of this size? They were just asking for trouble.

Thanks (0)
Replying to Paul Crowley:
avatar
By kjd
10th Dec 2015 09:55

Honestly...

cheekychappy wrote:
I’m not surprised the accounts and VAT were total crap. Why on earth would an accountant carry on letting the client use spreadsheets for a business of this size? They were just asking for trouble.

 

I don't think he knew his [***] from his elbow quite frankly.  We finally managed to get a copy of the 2014 accounts out of him but no working papers or supporting docs as his PC has been zipped up in a sealed bag by the police for some reason or another (he wasn't really prepared to divulge).  Needless to say, we all walked away fairly promptly at that point, there was little more he could add anyway.

 

I get on well with the client and he definitely sees the switch is needed but i've got a feeling he'd have balked at 50% of the proposed fee.

 

Emailing it across shortly so we'll certainly see I guess....

Thanks (0)
By Michael Beaver
10th Dec 2015 09:41

My bid would follow cheekychappy's logic.

Although, having had some experience with their transactions, do you have a sense of how complicated the transactions are?  Some of course will be quick, but is 90 seconds per transaction enough if some of the transactions are complex.

Could you do the basic bookkeeping in 10 hours per month?  

Given your recent experience of them, how many days per month are you looking at realistically?   Queries can be the killer if you don't have the documentation with you in house.  Build the quote up from that.  Divide that effort up between bookkeeping and management accounting support.  I charge bookkeeping out at £25 per hour, and the management accounting support at £75 per hour (based on a blend of my time and my bookkeeper's time).

Then layer on top the other deliverables such as tax return, accounts and VAT returns - remembering that if you get the bookkeeping right, those other things are made infinitely easier.

I bid for a similar job earlier this year based on their estimate of their previous bookkeeper's 4 days per month.  I've just successfully negotiated for them to pay an extra day per month because that is what it was taking.

Don't sell yourself short because the stress isn't worth it.  Once you have built up your bid, stick to it.  If he won't pay, then you've pretty much costed up what you can get from other clients from the same time effort - and that is what the competing prospect actually is.

 

Thanks (1)
avatar
By kjd
10th Dec 2015 09:49

Thanks for the replies so far

@Anne Robinson - agreed but if a client of this nature wants to walk away from what is turning into a very good relationship simply based on a cheaper quote i'd happily let them leave - it's a small price to pay to see them go early on before we get even more involved.

 

@Peter - I don't disagree with that either but it's done now hence the reason for needing to put something more formal in place asap moving forward.  A small loss of time doesn't bother me too much at all if it's the start of something long term.

 

Fee wise, i'd got it to just over £9800 so i'm not that far wide of the mark.  I'd be looking to hold fees static for 6 months, with a review after 3.  (thanks for the effort there @cheekychappy, not far off at all)

 

@cparker87 - I agree it could (probably will) turn into week to week work over time but to take a client from a £1k ish annual fee done on a spreadsheet to £25k overnight is just unrealistic in my opinion.

Thanks (0)
Glenn Martin
By Glenn Martin
10th Dec 2015 09:56

I wouldnt have the resources to support

but I would take Cheeky's hand off for the deal above. For me you need an internal member of staff involved as this would not be practical to support long term to fully outsource. If he is doing loads of transactions through ebay and paypal, there will be returns to deal with and a lot of time consuming fiddly tasks to do. So for me a lot of that would need to be dealt with by someone who is there every day. I think you would also need to get some sort of software to deal with the stock or inventory side of things.

Thanks (0)
By petersaxton
10th Dec 2015 10:26

Introduce reality

Explain what is wrong with the present system.

Explain the advantages of the system you propose.

Tell the client what it will cost. Don't consider what the client would like to pay.

Let the client decide whether to use you and pay the price or go elsewhere.

Thanks (0)
By ireallyshouldknowthisbut
10th Dec 2015 10:38

.

My approach would be somewhat different.

"I will help you hire a bookkeeper"

Then £2k for year end. 

Thanks (1)
By petersaxton
10th Dec 2015 10:53

Bookkeeping

Years ago when I was just starting out I was going to offer a service as an "accounts department". My address would be on the sales invoices and I would be getting everything. I would arrange authorisations. Given technological changes I think you could build up a reasonably profitable business. If you are just doing it as a one-off for a client I think it would be difficult to make it profitable without scaring away the client. It's important that the client understands the advantages. Most clients would just consider the perfect transaction and never imagine that anything would need investigation - you are an accountant so you know everything, right!

Why not offer to do one invoice for set up and another invoice for first month? If he doesn't like the invoice for the first month he can stop there.

Thanks (0)
By cheekychappy
10th Dec 2015 10:55

Picking up on what Glennzy has said...
You need to very clear what the quote involved.

You don’t want you or your staff to be unpaid admin assistants.

If the client is growing, the work you’re quoting on will only go on for a year, maybe two max. At some point they are going to want someone in the business full-time.

You need to be very clear what the quote involves.

You don’t want you or your staff to be unpaid admin assistants. This is a risk that could quite possibly happen so you need to be on your game regarding managing your client.

If the client is growing, the work you’re quoting on will only go on for a year, maybe two max. At some point they are going to want someone in the business full-time.

I couldn’t take on this work as there’s just me and a bookkeeper. I would have to commit to a sub-contractor which I wouldn’t want to do, and taking on another staff member for the sake of one client just isn’t logical. If you have existing capacity though, then obviously it would be a good win.

Thanks (0)
Glenn Martin
By Glenn Martin
10th Dec 2015 11:12

On Second Thoughts

I suppose this job is what was Xero was built for.

If you introduce some technology into you could clear the job up.

Get someone educated on receipt bank to take care of the purchases side of it.

I believe there is a whole host of apps that link amazon, paypal into Xero plus bank feeds.

A few month down the line you should be able to see the wood from the trees and have in place a very robust system for the guy to work with.

So you could charge for maybe 3 months set up then a monthly fee to monitor going forward.

I could see it working on that basis.

 

@Cheeky I heard you the first time mate. Ha Ha.

Thanks (1)
Teignmouth
By Paul Scholes
10th Dec 2015 14:33

For what it's worth kjd

Lots of sensible advise above.

It's always difficult to change someone's outlook on this sort of service, when they have only ever known sub-standard work.  Even if they now realise there was something horribly wrong, they will still perhaps view bookkeeping as a necessary evil, of no real worth.

There is absolutely no point being swayed by what you think the client will accept in a case like this, you are the one most at risk and so put yourself first, if it really is way too high for the client and they move on then it wasn't meant to be and you have avoided the distinct possibility of quoting at the bottom end, to attract the client, only to find in 6 months time that it was way too low and then having to go through the whole process again.

As I have experienced on a number of occasions if the quote doesn't make them run away but they are still unhappy about the number then the obvious solution is to get them as involved in the bookkeeping as possible and set out exactly how & when you need information for your bit, keeping your efficiency as high as possible.

With so many ifs & buts, and even knowing what the business looks like, I'd agree with your approach of a 3 or 6 month quote & review and, on what you say, I'd be looking at £20K to include all contact and ongoing financial/tax advise.

Good Luck

Thanks (1)
avatar
By kjd
23rd Dec 2015 16:20

Stand your ground

Just thought i'd update this thread for anyone interested.

 

I quoted the client just short of £10k in the end, which he declined being 4x what he's paying now.  I showed him the door and wished him all the best.

 

Still in constant contact he came back a week later with two other quotes both in the region of £5k (not that i've seen them).  Could I match the price?  No my friend, there's the door once more.

 

Well, could we find some common ground perhaps?  Nope, door again.  Ok, could I keep you on a small retainer in addition to the £5k accountant?  Definitely not.

 

Then yesterday we finally agreed on £795 a month, £35 below my original quote but it took him below the psychological barrier of £800 which seemed to do the trick.  It basically means we'll be doing the payroll for free which I can live with but in return he owes me and the wife dinner...which I plan on costing more than the £420 we've just lost out on!

 

Just goes to show: know your true worth and stick with it...

Thanks (4)
Replying to tom123:
By petersaxton
23rd Dec 2015 19:22

Congratulations

kjd wrote:

Just thought i'd update this thread for anyone interested.

 

I quoted the client just short of £10k in the end, which he declined being 4x what he's paying now.  I showed him the door and wished him all the best.

 

Still in constant contact he came back a week later with two other quotes both in the region of £5k (not that i've seen them).  Could I match the price?  No my friend, there's the door once more.

 

Well, could we find some common ground perhaps?  Nope, door again.  Ok, could I keep you on a small retainer in addition to the £5k accountant?  Definitely not.

 

Then yesterday we finally agreed on £795 a month, £35 below my original quote but it took him below the psychological barrier of £800 which seemed to do the trick.  It basically means we'll be doing the payroll for free which I can live with but in return he owes me and the wife dinner...which I plan on costing more than the £420 we've just lost out on!

 

Just goes to show: know your true worth and stick with it...

Well done.

Thanks (2)
Replying to tom123:
blue sheep
By NH
24th Dec 2015 08:58

well done

kjd wrote:

Just goes to show: know your true worth and stick with it...

Very well done, a lesson for us all

Thanks (1)
By cheekychappy
24th Dec 2015 10:21

Well done

But the real task will be managing and retaining this client.

Thanks (0)
the sea otter
By memyself-eye
24th Dec 2015 10:37

Dinner for £420!

Not at wetherspoons then?

Would love to see his face when he gets the bill... :)

 

Thanks (0)