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New client introduction bonus ?

New client introduction bonus ?

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What would be considered an appropriate way of rewarding a member of staff who brings in a client or two a month, these vary from small SA returns to decent limited sub audit companies. Any thoughts.

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By the_drookit_dug
24th Jul 2020 10:12

Presumably partnership eventually if they're bringing in quite a bit of work?
Otherwise, 25% of first year fee?

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Replying to the_drookit_dug:
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By atleastisoundknowledgable...
24th Jul 2020 10:12

At m first firm it was 10% of any payment received.

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Replying to the_drookit_dug:
ALISK
By atleastisoundknowledgable...
24th Jul 2020 10:17

At m first firm it was 10% of any payment received.

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ALISK
By atleastisoundknowledgable...
24th Jul 2020 10:13

What do you pay for external intros? Use that as a guide.

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By AthollAccounts
24th Jul 2020 10:18

My previous firm used to pay £50 on receipt of a signed engagement letter, then 15% of the first years fee (less the £50) when it was paid. They never defined what first years fees were so it always went in their favour. It seemed great at the time, but on reflection now it wasn't great for those who constantly brought in new work,
Personally I would offer a standard %, and then perhaps a year end bonus based on the number of clients they've brought in and the quality of that client. And as others have said consider bringing them into the business

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By CJaneH
24th Jul 2020 10:42

Many years ago (as an employee) I was contacted by a client of a former employer. I was offered a bonus by my employer, if it happened, but told I would not be allowed to act for that client. Told the prospective client who if he moved, moved else where.

Solicitors have fee earners who build up their own client pool, basis for offering them a partnership. It appeared to me if you could not build up your own client pool you had no way of proving your potential as a partner.

To the employee getting you the clients the one off bonus may not be the most important matter.

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By Mr_awol
24th Jul 2020 12:03

Depends on grade of employee.

For managers, it might be kind of expected as part of the role - and proof of potential for further development/reward.

Lower paid and junior staff might be more incentivised by the financial side of things.

When I was last in that position the rules were 50% of first year fee for repeat business, 15% for one-offs. Only paid when invoice paid. Recurring work generally meant the accounts fee, even if the client actual come in with payroll, etc (which wasn't that fair but in most cases more than offset by the comparatively generous 50% of the 'main' bill).

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By New To Accountancy
24th Jul 2020 22:24

15% was the introduction fee in my previous firm.

Edit : It was also the fee offered by IFAs from other businesses wanting us to refer to them for pensions etc. I introduced lots of clients through my husbands business but never received any introduction fee but was expected to do the work. I stopped introducing and this was another reason I left. I did not receive any incentive until I gave my notice, at which point it was too late.

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By DavidWatson
27th Jul 2020 11:01

Firms I worked in used to expect that you would do it if you were a manager or partner it was part of the role. For more junior members of staff who might refer friends or family members we would provide bottle of wine and thank you card and bear it in mind during their annual review. This didn't really motivate anyone and I think mostly the activity was reactive, staff didn't really seek the new client they would point them in the right direction when they were asked by someone.

Developing a referral network based around your own clients and others is potentially much more lucrative, and warrants a larger reward in my opinion. 30% of the first year fee would seem to be an appropriate amount. I think that an individuals ability to attract new clients is a rare skill and if someone is particularly good at it, I would allocate them more time to that role (assuming you want your firm to grow and have capacity) and look at a more structured bonus. One firm worked in had a bonus scheme that was paid 12 months later. The idea being that it kept you in your post and less likely to leave and made sure the client stayed for at least 12 months. The firm provided you with a statement letting you know how much you had in the bank as it were and when it would be paid to you. Quite an incentive to stay put when you had other job offers.

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Replying to DavidWatson:
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By Mr_awol
27th Jul 2020 11:49

If a client refers someone to me I sometimes give them a £50 or £75 credit, voucher, etc.

I'd never pay them a percentage as:
1) It tells them how much their referral is paying
2) Paying c30% makes it 'look' like there is a substantial profit in every client, including them (whether it is true or not, there's no need to spell it out to them).
3) I never accept commission, payment, etc for business referrals. I think its much more important that you refer someone you are genuinely happy with, in the hope that your friend/customer/client/etc gets a good service.

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blue sheep
By NH
31st Jul 2020 09:55

We have a standing offer to knock £50 off a clients fee for any introductions, when we introduced it a few years ago it made no difference at all to introductions from clients and a couple of them said "keep your £50, you do a good job so happy to introduce".

For employees it depends what they are doing - are they proactively going out selling or are they sitting there waiting for clients to walk through the door, if its just part of the every day job why would you pay anything, if they are dragging people in off the streets a financial incentive might make them work harder

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