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Fees for additional services

How do you differentiate ad hoc transactions outside letter of engagement

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For one person small company, on rock bottom monthly fees for compliance (never again) because I didn't think there would be lots of queries, I've had all sorts of tax questions posed over the last 3 months and I'm not prepared to keep answering these without making a charge for them. The answers are not off the top of my head. Client of course thinks they should be part of my fees. L.o.e states that advising on ad hoc transacs and queries may be separately chargeable.
How do you deal with these situations?
 

Replies (10)

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RLI
By lionofludesch
21st Feb 2019 17:21

Send a bill for the advice you've given so far.

If he pays, it'll give him a marker and make him think twice about asking questions.

If he doesn't, you may lose a client but may not be all that bothered.

Thanks (3)
By ireallyshouldknowthisbut
21st Feb 2019 18:17

What I would do is say something like "Whilst I like to be flexible with ad hoc question, the number you have been asking puts you way over the time budgeted in your fee for our services to you. I will therefore need to charge any more at my hourly rate...."

That way you cap it, without annoying the client which might be more your style than lion's suggestion?

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Replying to ireallyshouldknowthisbut:
RLI
By lionofludesch
21st Feb 2019 18:23

I'm not suggesting he should be aggressive with his request.

His LoE provides for fees and the client should be reminded that there are charges for this work. Not to mention that he should know before he runs up a huge bill.

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By andy.partridge
21st Feb 2019 19:41

Your letter of engagement puts you in the driving seat. The key is to get a small fee in early so the boundaries are set along with mutual expectations.

More difficult at this stage, but you could provide a statement of sorts that shows the historical goodwill free advice given and emphasise that all future advice is chargeable.

Understandably you won’t want to risk upsetting the client but the client that only consults you because you are free is worth the risk.

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Glenn Martin
By Glenn Martin
22nd Feb 2019 09:57

Can you not just re quote his monthly fee.

Tell him something like that "the figure originally quoted allowed for standard amount of time for anticipated queries throughout the year, however he is currently drawing more advice than budgeted for and therefore we need to revise your fee to provide the support your business needs"

He will either pay up or stop with the daft queries.

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Replying to Glennzy:
By Moonbeam
22nd Feb 2019 10:53

The queries are sadly not daft. I need to do a fair bit of education as my predecessors didn't know what they were doing and it appears that major areas are not understood by client.
I'm going to try to set up a phone call.
If he won't accept that a rock bottom quote will never cover all the extra stuff I'm resigned to saying goodbye, as I can't live with myself becoming a doormat.
Lesson learned (for me) is never quote a rock bottom fee as client will not be the one for me, and also stress at outset that quote is for advice here and there but not the sort of stuff where I have to go and look up things and compose and check lengthy emails.

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By 1 2
22nd Feb 2019 11:42

It can be a problem.

Our view is just to not take on clients at very low fees. We then answer any questions they ask to the best of our ability...provided they fall within the basic remit of what's agreed. Sometimes clients outgrow us, and start to ask questions we're not comfortable answering, at which point we advise they should move on, and that tends to happen at some point soon after on good terms.

In reality some clients are very little effort (and hence very profitable), others do ask a million questions across all kinds of things (and hence not profitable). That's just life. We haven't yet gone as far as sacking a client simply for asking too many questions, but have come close a few times!

This is one reason we stopped assisting sole traders a few years ago. They can be an absolute doddle (one tax return once a year), so understandably expect a low fee. However they can still be huge amounts of work (lots of questions). The nice thing about a Ltd Co (esp if registered for VAT/as an employer) is that there's enough stuff to be done across the year that even the "easy" clients understand the fee won't be trivial.

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All Paul Accountants in Leeds
By paulinleeds
26th Feb 2019 13:24

When I quote for a job, I give boundaries and expectations eg balanced records, Excel cash book adds up, full list of P60s, bank interest etc

My quotes always say:

'Other work

At times, a simple question or request for advice can lead on to more detailed work e.g. through a string of emails or a lengthy telephone conversation and where a specific charge for that work has not always been agreed in advance. The agreed charge for preparation of your annual Financial Statements includes access to limited complementary advice. This is on a fair use policy and is designed to cover quick emails and phone calls taking 5 or 10 minutes. Extra work will be chargeable. To give you an idea of those costs you should budget for a charge based on £xx ph.'

I sometimes also say a fair use policy so that I do not get 100 minute questions.

You just need to be clear with your client. If they want help then they must pay for it! Have you asked the to say extra. If they will not pay - adios!

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Replying to paulinleeds:
By Moonbeam
26th Feb 2019 14:16

Thank you Paul. I shall borrow some of your spiel for my quotes. I think this is an excellent idea.

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By CardiffAccountant
06th Mar 2019 14:59

Hi,

This may be a bit late now, but for the future.

I used to charge rock bottom prices, but soon learned this to be a big mistake. My mantra now is ‘if the price is not questioned, then the price is too low’.

When the price is queried, I give a simple breakdown of the work to be done, along with the associated tasks that will need completing.

Also, when you charge too low a price, potential clients feel that you are either desperate for the work, or simply feel that the quality of work will match the price.

Not only have I never (yet) had someone go elsewhere due to the fees being too great, but clients seem to expect to be charged for any additional work/advice.

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