Annual Fee Increase

What is 'proper' practice in terms of discussing fee increases vs service level

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Quick question. Been with our Accountants for 11yrs or so. Some years back they requested we set up a S/Order to cover the annual costs.

It has come to light that without any form of discussion ( phone or email ) they have been increasing the annual costs. Now whilst the increases tended to be marginal, this has happened over the past 4-5 years and now it seems that our account with them is more than £2k 'in the red'. To my mind it's poor business not to have been credit controlling the situation, but even worse not to have been having an annual 'chat' to check whether we're happy with the service and to advise that they expect/would like to increase the fee.

Their rebuttal is that they sent (email) out annual statements which show the fees. In fairness that is true, but given that we had set up a SO and had never been 'chased' for anything outstanding I mistakenly assumed that it was just for reference, and never really drilled into it - until now!

I'm not averse to increases for any service which warrants it, but in this case am feeling somewhat frustrated as i feel ( right/wrong) that we were already paying 'enough' for teh services we received.

So my question. Aside from 'good practice', is there a requirement for a client to be notified/agree to proposed increases in fee level - and given that the firm don't appear flexible in discussing this, to whom should I try to talk to to resolve.

Replies (23)

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By Tim Vane
09th Jun 2020 15:41

I think the annual statement that you couldn't be bothered to read would suffice as a notification of the fee increase. Also, a fee increase is normal and why would you not have expected it?

However, I do agree that not chasing you up for the outstanding amounts and not giving you specified notification is poor customer service (although many clients delete our emails without reading them, so perhaps you were notified and, again, couldn't be bothered to read it).

If you don't get satisfaction there are plenty more accountants out there.

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Replying to Tim Vane:
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By lionofludesch
09th Jun 2020 15:43

Tim Vane wrote:
.....although many clients delete our emails without reading them ......

There are times when letters still trump emails.

The truly paperless office is decades away.

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By DJKL
10th Jun 2020 12:44

Deleted as based on false premise

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By tom123
09th Jun 2020 15:42

There are two sides
1) the notification of the increase
2) the account statements.

They seem to have failed on both sides.
What does your engagement letter say about increases?
What did your invoices on the completion of the major work pieces actually say?

EDIT - just seen that you didn't check the statements - you can't really pin that on them, sorry.

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By tom123
09th Jun 2020 15:43

Those of us in industry etc are well used to credit control being a weekly process, and, even with our good customers, a bit of a war of attrition.

From what I can gather, some accountancy firms struggle with chasing their own customers, feeling it damages the relationship.

We have the best relationships with our customers who we speak to weekly.

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By spilly
09th Jun 2020 21:28

Seems like it was done weakly in this case.

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By Cheshire
09th Jun 2020 16:08

greenwoo wrote:

Quick question. Been with our Accountants for 11yrs or so. Some years back they requested we set up a S/Order to cover the annual costs.

It has come to light that without any form of discussion ( phone or email ) they have been increasing the annual costs. Now whilst the increases tended to be marginal, this has happened over the past 4-5 years and now it seems that our account with them is more than £2k 'in the red'. To my mind it's poor business not to have been credit controlling the situation, but even worse not to have been having an annual 'chat' to check whether we're happy with the service and to advise that they expect/would like to increase the fee.

Their rebuttal is that they sent (email) out annual statements which show the fees. In fairness that is true, but given that we had set up a SO and had never been 'chased' for anything outstanding I mistakenly assumed that it was just for reference, and never really drilled into it - until now!

I'm not averse to increases for any service which warrants it, but in this case am feeling somewhat frustrated as i feel ( right/wrong) that we were already paying 'enough' for teh services we received.

So my question. Aside from 'good practice', is there a requirement for a client to be notified/agree to proposed increases in fee level - and given that the firm don't appear flexible in discussing this, to whom should I try to talk to to resolve.

You think you are paying enough.

So in 11 years they are not entitled to a fee increase, which in real terms would see them getting a fee decrease.

I think I paid enough for all my bills 11 years ago, but they have all gone up, who should I complain to?

You need better control of your business, you get invoices and statements and you should be checking them, as they arrive.

Yet again, we have a business owner who cannot take responsibility for their business complaining about an Accountant on an Accountants forum for Accountants.

Gawd, I'm so fed up with the attitude of the GP.

Ps mine get advanced notification.

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By paul.benny
09th Jun 2020 16:25

Whilst I do have some sympathy with your general point, I think you're being unduly harsh on the OP.

Firstly it's 4-5 years (not the 11 you mention - although the OP might have been amended); secondly, s/he's quite clear that he would be willing to pay - the beef is with the failure to notify/discuss.

If a supplier raised prices on me without notification, I'd be a bit unhappy with them.

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By the_drookit_dug
09th Jun 2020 16:42

I agree, they should be meeting at least annually (whether online or in person), and fees should be a standing agenda item. And there's no excuse for the poor credit control on the accountant's part.

Admittedly OP should have queried sooner, but it wouldn't be an issue if the accountant was more proactive.

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Replying to Cheshire:
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By meadowsaw227
10th Jun 2020 11:40

Yet again we have an accountant not really having a face to face with their client and surreptitiously increasing their fees each year and then hiding behind a statement when caught out .

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By mrme89
09th Jun 2020 16:54

I think people are being harsh in the OP.

They’ve said that they are not adverse to increases but feel that they are already paying what they feel is a fair fee. An open discussion about the fee increase would have given opportunity to discuss the value from both parties and the OP would have had chance to negotiate should they have felt inclined to.

The accountant is in the wrong. Yes, the OP should have spotted it in the statement, but realistically, most clients won’t look when they pay an ongoing standing order.

To let the arrears build up without communication is also poor.

OP - the fee should have been reflected in your annual accounts. It is good business practice for you to review these rather than just accept what the accountant has produced.

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By ireallyshouldknowthisbut
09th Jun 2020 17:06

Its rather poor form to not discuss your fees with you and to "ratchet" them with your seemingly unaware, albeit it seems you have failed to read their statements so you are not entirely innocent in this matter. It may be they deliberately didn't say and hoped you wouldn't notice which is clearly not the relationship you want. It seems poor form to allow you to build arrears like this, and one wonders if that lack of attention to detail also applies to the work they do for you.

I would speak to your lead contact about your situation, and say what you have said on here.

Fundamentally do they do a good job for you? or do they just see you as a 'cash cow' to be milked? If the former, agree a price, and agree the basis for it. if the latter, shop around. You may well find the fees you are paying are high, as in general quite frankly they have fallen not gone up in the past 5 years. Most of mine have been frozen for years on the basis that our job is getting (generally) marginally quicker year on year, although some of mine have gone up.

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By Moonbeam
09th Jun 2020 18:10

My costs for various software items have shot up this year, and all clients will be informed about a small fee increase to pay for this. It would be very wrong not to tell them in advance, and I agree that just noting the increase on a statement is not very clear. I send emails about these matters. Your accountant has definitely not been making an effort to ensure that you are clear about the increases.

Unless you know what your accountant's fixed costs are and exactly what issues they come across when preparing your accounts and tax returns, I would say the idea that you think you are paying "enough" is not based on facts. Should any of my dear clients ask about fees I am happy to provide copious details. I am appalled that you can't find anyone to discuss the matter with.

Most kosher accountants' letters of engagement give you details of how to complain and who to complain to. Dig out your letter of engagement and follow the process detailed there. If there is no process or this doesn't work, write to one of the main partners with requests for a dialogue and let them know that if you don't get any reply within 7 days of your letter you will make a formal complaint to their institute.

And look for an accountant who does think that keeping clients informed is a good idea. There are lots of us out there.

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By SXGuy
09th Jun 2020 18:49

But by your own admission you were notified. As you said your wrongly assumed the emails which showed the increase in fees were just for reference.

Why you'd think that is beyond me. I don't receive a phone bill for 3 x the amount and say. Ah well its only for reference.

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By Richard Grant
09th Jun 2020 19:16

Surely you receive an invoice each year. Don't you claim the VAT back? If you fancy a change DM me and we would love to quote.

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By lionofludesch
09th Jun 2020 19:42

How is a five paragraph essay a "quick question"?

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Replying to lionofludesch:
By mrme89
09th Jun 2020 22:54

If the OP hadn’t given background info, they would have been criticised for not doing so.

It was hardly an onerous question.

Some non accountants quite rightly get given a hard time. I don’t think this question warrants much criticism.

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By lionofludesch
12th Jun 2020 12:13

I don't deny that.

The description of "quick" was the issue.

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By Mr_awol
10th Jun 2020 10:30

It can be easy for this to happen with Standing Order on account payments. You get kind of used to the balance going up and down, particularly if you operate a fair SO plan which aims to collect the fees (say) 9-6 months in advance, 3-6 months in arrears, and the client actually brings their books in at varying times from one year to another.

The key thing is that invoices are sent when work is complete and that these are brought to the client's attention at the time. I also refer them to our (usually modest) increase and/or any extras included. That is their opportunity to query or dispute a bill. Also, if a bill includes 'extras' outside the scope of the Standing Order then it is spelled out to the client the exact amount, including VAT, which we require payment for now, otherwise of course the SO plan will creep into arrears more quickly.

We tend to set a Standing Order up with a little bit of headroom in it based on expected fees, with the intention that it wont need to be increased for 2-3 years. The fees level should be reviewed annually to check that no arrears have accrued but sometimes it gets missed and only shows up on the debtors report. At that point the client may need to pay a few hundred pounds 'catch up'. They will, however, have received regular statements so this shouldn't be a surprise to them. In addition to that I personally highlight in detail that the (optional) are 'on account' when signing up new clients.

Your alternative is to go to a firm who offer fixed Standing Order payments on a Gold/Silver/Bronze package because their Software suppliers have convinced them that this is 'progressive'. The downside is that should you ever want to leave, you will need to plan it months in advance or get caught by their shady terms and conditions which entitle them to keep any payments made, whether they have carried out a pro-rata amount of work for the service or not. Personally I wouldn't go near such a firm but each to their own.

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By greenwoo
10th Jun 2020 12:20

Thank you all.
Yep, I did have my eye off the ball.

To those that questioned; Nope, I have no problem with folks providing a service to charge accordingly, which may mean fees going up ( or down ); I'd just have expected a conversation/request rather than an 'after the fact'.

Checking the balance statement wasn't straightforward, because actually the annual charge was applied anywhere from Sept thru to Jan, so it didn't often relate to a full 12mths worth of SOrders. Given that no one on their side flagged that the SO wasn't enough to deal with the resulting totals - I missed it.

Anyway, appreciative of your collective thoughts - will draw a line under, and review options.

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By pauljohnston
12th Jun 2020 10:55

We advise all our clients of our fees each year and if there is an increase then this is apparent. Standing Orders need to converted to Direct Debits just to prevent what the o/p has encountered with go cardless and the like it is now very easy

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By Mr_awol
14th Jun 2020 21:57

Standing orders work fine for us. Occasionally the odd one gets missed for an uplift but it’s not normally problematic.

Beats giving away a percentage of the fee for no reason and potentially exposing yourself to spurious claims under the DD guarantee (not that I’d expect any issues like that but those are two of the main reasons we decided not to change to DD).

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By Rgab1947
12th Jun 2020 13:39

The OP has a point on it not being discussed but really? The OP expects the fee to remain as is for years? Does his business keep the same price of 4+ years ago.

So OP must take some responsibility but probable wont. He lost me when he said he pays enough as it is. The OP just fell in the same category as my D clients (Of which I have none as I will not tolerate a client who thinks so little of my services)

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