Practice zone
Feature
Practitioner's Diary: What are you worth?
Our West Country general practitioner ponders the value of accountancy services - and getting paid.
* * *
30 April - End of April. I have completed two 2008 Tax Returns so far, and I think we have filed a couple with HMRC, so we're definitely ahead of last year already. My focus over the next month will be completing the training for compliance staff, both tax and accounts/audit, so we can be more efficient this year - which means me delegating much more so I don't become a bottleneck in the system. That in turn means our systems and review procedures must be reliable and effective. They are - most of the time. The challenge is to make sure the odd few can't slip through the net in future.
Quality, delegation, effective client service - all this should feed back into the firm's value proposition, enabling us to charge more for our services and to distinguish ourselves from the opposition. Thats the plan anyway!
* * *
28 April - Oooh Bob, that hurt! I know what you're saying, and agree to a certain extent, but I still think there's a cost aspect that clients should understand. Nothing stays the same price forever, that's just the way it is, and it doesn't mean it gets better every time the price goes up. Clients accept that in every other walk of life, but we seem to have been unecessarily coy in going back to them every couple of years and asking for more money for the work we do for them.
The proof is that we DO normally make a small annual increase to our fees in most cases and I can't remember the last time a client objected to it. What they do object to is poor service and failure to meet their expectations.
* * *
25 April - So far so good, the team are all up for a comprehensive fee review this year. I need to contact all our standing order clients this month though so we don't get caught out and end up marking time for a year. I notice that we are quite good at setting fixed fees and standing orders for new clients, but we're very slow at reviewing them and issuing new fee agreements in subsequent years.
The bottom line is - do we risk losing clients in order to raise fees across the board? If we raise fees by 10 per cent and lose 10 per cent of our current clients as a result it won't be a disaster, although it's a bit harsh. There must be a happy medium which will satisfy most clients. If we lose the bottom 5 per cent (who care more about the fee than the service) then I would see that as a good result.
* * *
22 April - I have been reviewing my client list as we head off into a new financial year, and I have come to the conclusion that it's time to get tough. Our clients seem to have been in denial when it comes to conversations on inflation, and as a result many have been paying the same fee for the last few years - which probably puts us about 10 per cent below where we should be now!
So we're faced with even more pressure to get the fees up to a reasonable level this year. It's going to require a fair amount of diplomacy to persuade clients that a rise is due - and I suspect I'll have to work on my team too, to prevent them being too soft on their favourite clients.
* * *
21 April - A varied day back in the office. Once again I am reminded how little I know about so much! Over the course of the day I received several apparently simple tax questions about Stamp Duty and CGT and discovered that I wasn't sure of the answer to ANY of them!!
Is this once again a sign that laws and regulations, tax in particular, are just getting too complicated for the general practitioner? Or am I getting too old for this game?
So I am continually grateful for online tax reference services which mean that the answers to such questions is just a few mouse clicks away. I may not know the answer off the top of my head, but I know where to look it up.
These questions reminded me of something I have heard Mark Lee and others point out many times - that all too often we are tempted to give away our Crown Jewels, that vast fund of technical knowledge that we have worked for so many years to accumulate. How easy it is to give a quick off the cuff reply to a technical question, which totally undervalues the advice we're giving while potentially saving the client a packet.
I am trying these days to be more circumspect. Such enquiries first require a wise pause, often accompanied by a loud sucking in of air through the teeth, followed by something like "That sounds serious..." or "I think you have a problem there..." At the very least you have to leave the client sweating for a few hours before you phone back (often with the advice you scribbled down while he was originally on the phone!). Better is the urgent meeting to discuss the problem - often this focuses the client's mind and opens up some other aspect of the problem or transaction that he/she forgot to mention on the phone, and which completely changee the advice you would otherwise have given.
Either way, I think you need to stop and think, make sure you have all the angles covered and ensure that your client gets the best advice - which may not be what he wants to hear, and it may not be a simple yes/no answer. After all, if that's what he wants he can always ask his "mate in the pub"!
* * *
18 April - Just in case anyone out there is interested (hello .....anyone ....?), I DID manage to get hold of a password and got online on Wednesday, so I was able to get some stuff done out of the office yesterday too. Clever thing, this Remote Desktop, it's almost like being in front of your own computer, but you're not. Printing is a snag though, because the remote desktop window is actually your office PC, so when you hit print it comes out ... in the office! And although it looks like a normal Windows window, you can't cut and paste between your local PC and the remote desktop "window". Must ask our IT guy how to fix the printing issue and I'll be set up.
Just need to remember my passwords in future!!
* * *
16 April - Passwords, don't you just hate them?! Having to work from home today while the builders are in, but no problem (I thought), I can use Windows Remote Desktop (provided my office laptop hasn't powered down overnight)or I can access our Exchange server and practice management system online as they are hosted off-site. Snag is I never type in my password in the office, it just comes up as a string of ***'s as soon as I type in my user name. I know it's farily complicated - upper and lower case plus numbers and special characters - but I don't seem to have recorded it anywhere. And our IT manager is off sick. No password, no access!
Looks like I'm just going to be able to make a few phone calls and work on the files I brought home last night. So much for flexible working.
* * *
14 April - First job is to capture all the data we need. Our practice management system has scope for recording unlimited events, dates and such against each client, the challenge is getting the data out in a useful way. I am sure there is a way, our IT manager will either have to learn how to do it or we'll need to buy in some consultancy time to do it for us.
In the meantime my team are tasked with making sure we have all the dates and data up together, which will enable us to pull together all the disparate Excel and other databases into one place.
* * *
11 April - Have calmed down now. Maybe I was over-reacting to this latest late filing dash, as a colleague pointed out we haven't actually missed a deadline wholly through our own fault (at least, not for some time) - it's just that most months we get too close for (at least my) comfort!
So this month I'm going to have to devote some time to workflow monitoring and working out how to keep tabs on deadlines. We DO have systems and lists for each of them but:
a) they are all in different places, overseen by different people, and;
b) we have no effective way of generating reports on some of them - we're good at capturing the data but have no good way of extracting it in a useful way!
I guess there are some expensive software systems out there that automate all this, but what about for the rest of us? I'm open to suggestions - has anyone done anything clever with Excel, Access, Outlook tasks or diary reminders?
What I need is something that will generate daily reminders of impending deadlines where tasks are outstanding. If I have to go looking at lists to see what we need to do it just isn't going to happen, it needs to be automated. Isn't that what software is supposed to be good at?
* * *
7 April - All I can say is, thank goodness for online filing! Last week's urgent accounts and CT Return were duly delivered to the appropriate authorities online on the due date - and since neither were carrying out essential maintenance or overloaded by seasonal filing blips, both sailed though without a hitch.
Of course, the client who had ignored our repeated requests to attend to the annual accounts won't be particularly appreciative of the extra effort we put in as it seems to him that we were only doing our job! Shame as a sole director he couldn't be bothered to attend to his own legal duties!!
I think a 'company directors responsibilities' leaflet might be a good idea just to remind our growing band of company clients that they do carry some heavy responsibilities that they canot just fob off onto us. I expect I can get something from Companies House rather than writing it myself.
* * *
1 April - We seem to have self-assessment deadlines covered, the tax team monitor them like hawks and we file very few late returns each year - half a dozen at most, and in almost every case the client has agreed to the late filing.
But when it comes to companies, which are the big growth area of the practice, we are still a shambles. We now have to monitor:
- Filing Annual Returns to Companies House
- Annual accounts to Companies House
- CT600 and accounts to HMR&C
- Payment of Corporation Tax - a more common event now the nil CT band has gone
- Submission of P35s
- Submission of P11Ds
Have I missed anything off the list - probably!
The point is that all these come with late filing penalties, interest or (in the case of 363s) threatening letters to the client to which they tend to take offence.
So every company client offers a range of opportunities to screw up, upset the client and incur some sort of penalty that the client will try to pin on us. The trouble is that however hard my corporate team try, we just can't seem to avoid missing the odd deadline here and there, and it's costing us money. There must be a better workflow/deadline monitoring stystem out there, but I haven't seen it yet. Maybe it's just down to better staff training and getting our people to take the deadlines as seriously as the clients do.
Is anyone else thinking that life was much easier when sole trades and partnerships were all the rage?
* * *
Marketing, practice development, the Budget and client communication - it was all in our practitioner diarist's March 2008 diary.
Number of comments: 15
AccountingWEB.co.uk 30-Apr-2008
Categories: Practice News, Practice Features, Practitioner's Diary
Times read: 12947
I always like the often quoted "if you double your fees you will only lose 25% of your clients".
What is not mentioned is that the remaining 75% will be very very grumpy.
David
Mark - all good stuff and I'm suggesting firms focus on their value proposition rather than just their price. The fee is only half the story.
Our West Country general practitioner can be a good example to his clients if he sets his price using an external mindset of value rather than using internal costs. Even when he puts his prices up he could still be undercharging.
Managing clients with price is an option. That's what the banks have done and it's interesting to see what's happening to them.
I'd encourage accountants to provide support to their clients. How about a client induction program, regular customer care calls, text messaging, email reminders, tax calanders and free software?
Segmenting and niche marketing is vital for all small businesses. I'm advising our firms focus on the segment that wants to play ball and welcomes advice and support.
Once you've put the suggest and education in place move away from clients who don't want to work with you. If you don't the bad clients will take your resources and energy away from good clients.
Bob Harper
www.moresoftware.biz
Good to see this coming up on the agenda. Our West Country general practitioner wouldn't be a very good example to his clients if he didn't raise his prices at least annually.
As business advisers our credibility is at least, in part, a function of how we are seen to run our own business.
This is a great year to not just raise prices but also to revise business terms so that, for example, clients paying by standing order are still liable for a higher fee if they don't keep to their side of the bargain. This year is special due to the introduction of the 31 October deadline for filing paper based tax returns. For many accountants that necessitates planning for the consequential changes, telling clients about the changes in good time and, can be used to justify new terms of business.
Most clients are quite used to the idea that the price of a train ticket or a hotel room depends on various factors such as when they book it, pay for it, whether it's during a busy season or a quiet period and so on.
Why don't more accountants educate their clients to accept that the fees they pay will similarly vary by reference to salient factors?
Nigel - thanks. I'm not going talk technical or mention our software in any post unless I am asked to. Instead, I'll stick to strategy and methodology posts where I believe there's value.
Rachel - I agree software or a bookkeping service alone is not the answer. However, these save clients time, improve their financial control, give them useful information and protect them from tax investigations. And if you provide them as part of your service you get credited for the value. You'll also reduce the time at the year end which improves your recovery rates and eliminates workflow pressures.
We've done some work on the value of providing free bookkeeping software and believe this to be in the region of £2,000 a year. You can let the software house pick this up or take credit yourself.
The key to value in compliance based engagemets is doing more than the accounts and tax return. Having all your clients doing good bookkeeping means you have the time and information to deliver proactive tax advice.
If you don't have clients that do good bookkeeping it's difficult to effectively advise on Tax Credit opportunities, review interim payments, provide interim tax estimates and check things like directior's loan accounts on a quarterly basis.
Here's a couple of suggestions to help bring this change about in your clients:
1) Have a policy to only represent clients who a) are able to keep records to Self Assessment standards which includes doing a bank reconciliation and basic control accounts b) willing to pay for their bookkeeping to be done for them.
2) Have a client education program - bookkeeping is faily simple but tax is very complex and you can demonstrate this to clients in lots of ways.
Your comments on price seem internally focussed. You say "you have to charge a reasonable fee for the work which does have to reflect costs". We have some free audio CDs by Ron Baker on Value Pricing you may find useful. According to 2020 Value Pricing is the number one skill accountants need to master and Ron is the world expert on this.
I do agree there needs a match between the "value perceptions" of the customer and provider. There probably is with you and VT and Fasttax.on this subject. However, perceptions can change like when you stare at one of those 3D pictures. At the beginning you can only see dots but after a while you see a beautiful picture.
It's like that with Value Pricing. Have a play with the calculator on our Website and you may see see something you're not aware of at the moment.
Bob Harper
www.moresoftware.biz.
Rachel, Bob is politely not blowing his own trumpet too loudly here, but perhaps I could mention that his philosophy at More. He passionately believes that if we could train clients to keep a simple cash book AND reconcile it with the bank our work on their accounts would be much simpler and they could save on accountancy fees - or at least, they would spend less on simple bookkeeping so they could then afford to use us for more valuable tax and business advice.
I am sure there is a bunch of clients at the bottom of the heap who would never do this, but there may well be some that could. Most of us just don't bother to encourage them.
The same applies to those who use Sage/MYOB/QuickBooks poorly. Should we charge them extra each year to fix their bookkeeping before we can prepare their accounts (we should at least bill those two tasks separately)? Or could we sell them some training so their records keeping is better in future - a one-off investment that should save money in future?
Sorry I don't agree that software is a major issue in providing value for money. As I suspect a lot of accountants have found some people with no accountancy skills prepare their own accounts on these things and present them to you expecting a very low fee for you to find that it would probably have been cheaper for you to do the thing from scratch than find all their mistakes and correct them. Yes you explain how to do better next time, but they usually don't and you are stuck with a situation in which neither client nor practioner is happy. As professionals we are in the best position to judge who is able to prepare their own accounts and who would be better off having it prepared for them (certainly not necessarily by the accountant either).
Software sellers are keen to portray accountancy and tax as an easy skill anyone can do. When you are in practice you realise just what an enormous amount of legislation needs to be complied with and how hard it is to keep up with your areas of expertise doing this full-time.
If you ask a solicitor to draw up employment contracts you don't usually do so and "what value (or money) does this save me?" so why on earth are you suggesting that accountancy and tax compliance work is not the same? Commercially you have to charge a reasonable fee for the work which does have to reflect costs (we are in business) - but I don't think that is the same as what a client thinks something is worth. Some of my clients would think I should provide everything for free - others turn up with extra cheques for work I've told them there won't be a charge for the same thing.
If I told VT or Fasttax that I only wanted to pay them £50 each for their products this year because that was all it was worth to me I strongly suspect I would be told to go ahead without purchasing their software. Should I employ staff on the basis that their salary will be less if the clients don't want to pay the full fee-note they raise? Why are accountants seen as such a soft touch? We are business owners as well as professionals.
Rachel,
I agree clients pay for knowledge BUT not the cost of acquiring it. Instead, they're thinking what's it's worth to them.
You can push clients away if you want by rasing your prices using a cost plus pricing system but ask yourself if your internal processes are effective first. If you are spending longer than four hours doing accounts at the year-end it's because the bookkeeping is weak.
Help your clients improve their books and you don't need to raise prices to make higher recoveries. Give free software or an affordable bookkeeping service and you're instantly more marketable.
Bob
www.moresoftware.biz
It's ok to say if your service hasn't changed you shouldn't charge anymore but that is not realistic. We're not just talking about general inflation and having to pay staff more because of it - regulations and legislation are being thrown at us at an enormous rate and we need to pay for that downtime to learn it. Clients pay for our knowledge and what it costs us to acquire it. In my experience the clients on the biggest bargin fixed fees are usually the worst timewasters and payers around. If you lose a client by increasing your fee to the new going rate so be it. They probably weren't worth it financially anyway. If you have below market fees your clients will always treat you as if you are "not as good" as those charging more.
It’s interesting that you’re going to use inflation as the reason for the increase rather than service value.
I’d suggest that your clients aren’t in denial about inflation; they just don’t care about your costs increasing!
Bob
www.moresoftware.biz
An online password manager (with ability to save a local copy) is recommended. I have over 60 passwords in my own one!!!
See Accountantspowertools.co.uk for a few suggestions!
Relate Software has a deadline tracking system to cover all dates and deadlines attached to a full central database. It includes all the suggested deadlines and many other besides.
The product is called DRIVE and it includes a full CRM, Practice Management and Accounting system attached to a single, central SQL database. There's no need to use several products; DRIVE will do it all. There's no need for separate databases; the DRIVE one will suffice. Contact me for more details.
I get Outlook-overload. I set so many Outlook reminders for day-to-day things that the big, immovable deadlines would get swamped.
What about Outlook with Business Contact Manager or just the plain old Outlook calendar and task list?
Providing the data is loaded accurately, you can set recurring reminders etc
...as these programmes only give you reminders when you have them open.
What is really needed is a single programme with ALL your deadlines in it; then it would be likely that you would have the programme open every day.
Or more precisely at the top i.e. DIGITA
DIGITA Corporation & Deferred Tax will monitor:
* Payment of Corporation Tax - a more common event now the nil CT band has gone
* Annual accounts to Companies House
* CT600 and accounts to HMR&C
DIGITA Company Secretarial will monitor:
* Filing Annual Returns to Companies House
I think it's pen & paper for:
* Submission of P35s
* Submission of P11Ds
