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Fee reduction due to covid-19

Reducing monthly fees by 50%

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I am thinking of reducing monthly fees by 50% for those of my clients who are facing dificulties due to covid-19 for a couple of months.

Maybe I will put in a proviso that these fees will be recouped in the Oct-Dec 2020 period.

Anyone doing something similar or any thoughts?

Replies (16)

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By ohgoodgodno
20th Mar 2020 08:24

surely it depends upon the work you are doing?

some services such as bookkeeping, payroll etc may naturally just reduce in volume for a few months and so a reduced fee will be automatic if charging by the hour

we have discussed a similar position, and came to the conclusion to carry on as we are and assess each client case as and when the client raises the issue.......we've already given the majority of this week for free helping clients prepare and plan for the uncertainty that's ahead

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By accountantccole
20th Mar 2020 08:34

Only if the workload reduces surely?
We're doing extra cashflows and planning rather than less work

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By SXGuy
20th Mar 2020 09:25

No I'm not. I'll be more than happy to try and help with their cash flow or recommend any government backed incentives to help but at the end of the day I still have bills too.

I'm sure my software providers will love me paying them 50% of their fee to use 100% of the software.

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blue sheep
By Nigel Henshaw
20th Mar 2020 09:30

Its a very tricky one this, for example I have a client that has decided very laudably to close his business and tell staff to stay at home for the duration, my heart tells me I should offer to pause his monthly payments.
Is that fair to all other clients, and I still have to pay my bills, staff etc.
Do I say to all clients, if you have to close we pause/reduce payments?
With some clients it will come to that anyway if they cannot pay.
Other clients may not be effected at all apart from the general economic downturn.
However what about further down the line, I will never recoup the losses in fees so I do not see your idea of increasing them later is an option. we also have to consider the impact on cashflow for the next few months, maybe years.

And to those saying it depends on the work you are doing, no not really, these clients pay fixed fees across the year no matter what we do, we have been working all the hours there are this week trying to support clients, we still charge the same. If I did agree to pause payments I would still work for them.

My feeling as of this morning is that I have to look at each on a case by case basis and my feeling is that if we could be sure of the 10k grant that would ease the pressure and allow us to be a bit more flexible.

At the end of the day we are all in this together

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Replying to NH:
By marks
21st Mar 2020 22:02

NH wrote:

these clients pay fixed fees across the year no matter what we do, we have been working all the hours there are this week trying to support clients, we still charge the same.

If you charge the same to clients regardless what you do then I would say you need to look at your fixed fee model.

We do fixed fees and have done since started 8 years ago but we dont do unlimited work.

The fee is fixed at the start of the year based on the scope agreed but can change due to;

1. Review bookkeeping transactions levels each 3 months and move fee up or down as necessary based on number of transactions
2. Review payroll each month and move up or down based if there is more or less employees
3. Quick queries are included free (things we can answer in less than 10 mins). If take longer we give a separate proposal and ask of they want us to deal with the query. Most queries need consideration, research, communication and will take more than 10 minutes other than if it is basic such as "how do I pay my self assessment bill"
4. If clients ask for something outwith remit eg business plan then that is separately charged for
5. If client asks to have a meeting and there is no meeting in their proposal then that is separately charged for.

Unlike many it seems on here we arent a charity and clients pay for our help and advice to help them; free up their time, earn them more money and take stress away from them.

These are times that are outwith anything in living memory and we will help clients where we can.

I will be doing a webinar to three separate groups on Monday;
people who we have on our marketing list that arent clients,
and business owners generally via facebook ad campaign.

I will be giving them a summary of all the main points that has been released in the last week, matters they should be considering in their business (cashflow planning and forecasting) and what strategies to have in place when they come out the other side.

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Replying to marks:
By meadowsaw227
24th Mar 2020 10:00

I'm not a charity either but am happy to be charitable to my clients for the time being.
It is not always about the money

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By michaelbeaver
20th Mar 2020 10:09

I have given this some thought, but then decided that our fees are usually such a small proportion of our clients' expenses, that it won't help them that much, and it would have a very large impact on us.

We don't have a monthly charge, but charge an annual fee once per year. We have decided instead to allow clients to pay that annual fee over time, rather than reduce the fee.

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By bernard michael
20th Mar 2020 10:38

You spoil the goodwill generated by the sentence "Maybe.....................................etc"
What happens if he virus effect is still there in Oct-Dec

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By Luke
20th Mar 2020 10:46

Yes this is a very difficult one.

It depends on a client to client basis for me I think. Some clients will always take the *** and those are the clients for whom business will continue as normal and they will still want a reduced fee or say they are struggling when I know very well they have less income but are definitely not struggling.

Contrast that to a client I had on the phone a couple of days ago who suddenly has no income but has a new mortgage with a partner in the same boat. She wants to get her 19/20 tax return worked on as soon as possible but I really don't think I can bring myself to charge her full fees. I have already offered I would do it at a discounted rate, just not said what.

For me, un-business minded as it is, it would be immoral to charge her full fees when she may well genuinely struggle to eat and pay her bills but my other half has a stable employment income and I will still have an income even if lower than before.

I do not have clients on monthly payments so it is probably easier for me to deal with it on a case by case basis. I did send out six monthly payroll invoices yesterday as usual but with a note saying I know it's a tough time, if you will have trouble paying please get in touch. Over half have already paid and the one I doubt will pay, will not get in touch but at least I have offered.

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By justsotax
20th Mar 2020 10:47

it also depends upon how the government intend to help - if they suddenly provide individuals and/or businesses with the income to get them over this period you may end up with only 50% fees this year and then next year having to argue an increase back to 'normal' for accounts where 3-4 months there was no income/few transactions…..

Offer better terms (pay over period etc....) and to the ones you expect to pay....if you already have bad payers they will not improve.

I suspect where some form of compensation is to be paid that for SA cases that will be done upon recent Return - so may potentially mean lots of work soon - with an offer of 50% discount you will end up doing lots and you won't get compensated accordingly....

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Red Leader
By Red Leader
20th Mar 2020 11:02


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By ireallyshouldknowthisbut
20th Mar 2020 11:37

Case by case basis.

I just did a free (very late) tax return for an NHS worker who was very stressed and missed the Jan deadline.
I have not send a bill to a client in travel who I have spent 6-8 hours with, but intended to bill the Dec year end accounts in full end of September (we normally do them in Feb)
I have some contractors who are out of work, again we normally discount those by 1/3rd on a quarterly bill if there are no VAT entries.
But everyone else is getting billed as normal.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
24th Mar 2020 10:25

I'm keeping everything the same, but if someone comes to me and says they are having difficulty, I'll obviously work with them and revise fees accordingly. I can afford to reduce some of my monthly income but not all of it, for obvious reasons! Preferably I'll recoup it later this year/next, but it's a case by case basis

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By pauljohnston
24th Mar 2020 11:15
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24th Mar 2020 14:24

Yers, I've emailed my client stating that those who are very wealthy and not suffering excessively from this virus problem can expect my fees to be roughly the same, whereas those who have been struggling for the last few years, or are suddenly in exceptional financial hardship, can expect my fees to be much reduced .... yes, I'll lose quite a lot of income whilst almost certainly doing more work, and some of my clients will fall by the wayside, but those who manage to survive this epidemic will value me more .... I don't want my fees to be the last straw to a struggling client.

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By Andy Reeves
24th Mar 2020 16:57

Same work = same fees, but I will listen sympathetically to requests for extended payment terms. If we reduce our fees we will never get them back to the current levels.

If work is reduced, then I would consider a reduction, of course, but lower turnover doesn't always equate to less work to prepare the accounts and tax return. In any case, we have nearly reached the end of this tax year, so any reduction in activity would be next year in most cases

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