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Previous accountant's fees exorbitant

Challengeable - solicitor time or report to RPB?

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I've recently taken over a new client from a larger firm. TO £1.5M. Currently on Sage. The owners have wanted for a long time quarterly management accounts, but the accountants have only ever done payroll, Sage bookkeeping and annual accounts. They've gone way overboard in terms of Sage detail, presumably in order to rack up more and more fees.

 

Anyway, the client was quoted £12k at outset, and have been billed £10k/quarter for last 6 quarters. £25k in outstanding fees atm.

The engagement letter will inevitably say fees are on a time cost basis, and the bills will agree to timesheets. It's an ICAEW regulated firm.

 

Client has asked me for help. Where do they go from here?

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21st Apr 2019 09:23

Not sure what it’s got to do with you. Advise them to see a solicitor. It’s really that simple.

Thanks (2)
to andy.partridge
21st Apr 2019 09:55

I agree - one for the legal adviser. It does beg the question, though - if the quote was for £12k per annum, why did the client pay £10k per quarter more than once without, it would seem, challenge? There’s bound to be much more to the story than the brief points in the question.

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to Wilson Philips
21st Apr 2019 10:02

True. I’m not entirely sure whether they have been billed and paid, billed and part paid or billed only. Still, I would be inclined not to get involved.

Thanks (1)
to andy.partridge
21st Apr 2019 10:10

Well, if they’ve been billed £60,000, and only £25,000 is outstanding that would suggest that £35,000 has been paid. I doubt that any of my clients would have willingly paid that amount against a £12k annual quote without question.

As you say, it’s a matter for the client, their solicitor, ICAEW, and the former agent - nothing to do with the current agent, other than to point them in the right direction.

Thanks (5)
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to Wilson Philips
21st Apr 2019 18:32

Thanks Wilson Phillips, I agree. Will point them towards a solicitor

Thanks (1)
to fellowcraft
21st Apr 2019 21:00

You’re welcome.

Thanks (5)
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23rd Apr 2019 08:56

As another poster says, there's probably more to this than spelt out in the OP.

It could be that the client is high maintenance and the fees on the meter do reflect the actual time cost. Keep an eye on your own costs and give the client warning if they are racking up lots of fees. A big bill is one thing. An surprise bill is a recipe for falling out and being unable to recover

Thanks (3)
to paul.benny
26th Apr 2019 13:15

High maintenance really adds to costs. I've got several Sage jobs where we're continually having to chase up for documents and queries. I've analysed the time: typically 3x the time for a straightforward job where everything is delivered in order and on time and no additional explanations have to be obtained.

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By Mr_awol
23rd Apr 2019 11:55

Rightly or wrongly, there isn't a whole lot of protection for businesses - certainly not like consumer protection.

Sounds like the client is either a demanding pain in the rear end, or a bit of a muppet (depending on whether the fees are overcharged as you suspect, or whether they actually represent 'good' work.

It's fairly low turnover and they appear to be paying significant fees, but that doesn't mean it isn't fair.

Thanks (1)
24th Apr 2019 01:32

Give us a clue. In which county is the previous accountant based.

I know of at least one ICAEW firm which bills clients just like that. They cover themselves with their engagement letters. Difficult to argue against if terms have been agreed. Been investigated by ICAEW but firm is teflon coated so nothing sticks to them.

Thanks (0)
By tom123
26th Apr 2019 08:48

£1.5 m turnover is not tiny - if every invoice is for low values, then there could actually be quite a bit of work there.

Plenty of firms that size would have some in house finance type staff. If this firm is trying to avoid that, then it is likely they will have some considerable fees instead.

Bit different than doing accounts once a year from a lever arch file containing everything.

Thanks (2)
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26th Apr 2019 10:40

You cant judge based on the limited info or context but it does appear to be excessive. The rate per hour could help explain as well as what was processed and how/why.

To be fair it's possible you charge a client £12k or even £24k a year for bookkeeping and managing sales and purchase ledgers and factored sales etc and justify if: for example it was an alternative to employing 2 full time staff with NI pension holidays and other staff and software costs.

That said £40k per year on £1.5m sales does not seem to stack up.

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26th Apr 2019 11:19

For reference, the professional bodies do not get involved in fees disputes as a general rule. I agree with everyone's advice - your clients should see a lawyer BUT make sure they do not pay over the top in legal fees as well!

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26th Apr 2019 13:21

You should not get involved.

It depends on what was agreed and what was done of course. If the previous accountants have charged for work not done then the client needs to dispute this with the accountant and not pay the outstanding bill if he is sure of his facts.

You have not given enough facts to go to a solicitor yet!

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27th Apr 2019 13:18

Smile nod and tell them to get an inhouse bookkeeper for 25k a year and youll do the year end accounts for £2500+vat and everyone wins....

They shouldn't have agreed to the fees if they didn't want to pay them and they had plenty of notice and agreed to them by paying first quarters fees. Trying to beat them up will just incur legal costs and they will lose.

Too much detail on sage? Really? No complaints can be made about doing a job properly...

I saw a top 4 firm charge £1,000+vat for one dividend voucher...…. if the clients are daft enough to agree to the price...and sign a contract....

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to Tom 7000
28th Apr 2019 20:44

deleted - mis-read your post!

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