Is ripping off clients a good policy?
Philip Fisher asks whether hidden charges can damage your reputation and drive away clients.
Clearly, very few accountants are in the market to rip off clients. However, a number of our peers can give the impression that this is their underlying philosophy.
Some readers might have noticed the absence of this column last week. That was because your hard-working writer was taking a holiday break in Bilbao, a lovely city. No visitor could fail to be awestruck by the sunlit sight of the Guggenheim in all of its splendour.
This weirdly-shaped golden building must surely be one of the seven modern wonders of the world. The impression is enhanced by spectacular outdoor sculptures, including one created from fog and another featuring gloriously balanced silver balls sculpted by the genius that is Anish Kapoor.
Elsewhere, the city is a beautiful mixture of ancient and modern, with a fine art gallery, a football stadium and a funicular railway leading you on to a hill with spectacular views of the city and even into France.
Enough of that. This article was inspired (if that is the word) by the efforts of three travel companies.
An airline, which had better remain nameless, proudly proclaims that it charges low prices. While the headline figure is undoubtedly affordable, very few will manage to pay that amount.
Food costs extra, sitting with a companion costs more and even taking carry-on luggage that does not fit into a cramped space under the seat ahead will hit your credit card. It was so bad that I didn’t dare spend a penny, since it would probably have cost a fiver.
The cynicism was summarised when a trio of Spanish students were stopped as they were about to board and unceremoniously ordered to pay £75 between them, as their modestly sized suitcases were confiscated and checked into stowed luggage. Judging by the looks on their faces, this anonymous airline will not be getting their repeat business.
In simple terms, unless there is a monopoly ie daytime flights to Bilbao from London, nobody in their right mind would want to deal with a company that looks like a bunch of shysters.
Rail companies also seek their pound of flesh. Having inadvertently booked a ticket that I did not need, I cancelled it within 24 hours and faced an “administration” charge of £10. There was no administration, as the repayment was made instantly online.
To prove that some organisations know how to treat customers Avanti, a new rail company, went the extra mile, the driver on a recent journey announcing that as a train was 20 minutes late, passengers should claim the refund to which they are entitled.
How does this fit into the world of accountancy? Increasingly, larger firms are beginning to operate on a similar, if marginally less cynical, basis.
Clients are used to paying an agreed fee for the work that they have commissioned. They will also accept extras, where these are agreed in advance and seem reasonable.
However, many firms now seem to push the boat out on additional work, increasing the agreed fee by substantial amounts and ending up in massive arguments, particularly when these result from inefficiencies by the firm rather than the client. As with the airline, this is not a way to retain clients.
On a smaller scale, clients currently expect to pay for expenses such as staff travel, although one day, someone might ask why.
More recently, an iniquitous policy of charging the same kind of “administration” fee as the train company has become popular. This is usually a percentage of the amount agreed, frequently hidden during the initial negotiations, and is completely unjustifiable. If you want a higher fee, why not be straight?
Maybe it is time for accountants to clean up their acts before we suffer reputational damage? Alternatively, could an honest firm that charges the amount that it quotes in all reasonable circumstances without hidden extras begin to make inroads into the client lists of its rivals?