Accountants debate charging a furlough processing fee
The question of how much accountancy firms should charge for the furlough scheme has been hotly debated on AccountingWEB. In his latest polemic, Kevin Whitehouse gives his take on accountancy’s current dilemma.
Last Monday morning, many accountants got up at 6am and started feeding their clients information into HMRC’s furlough portal and were still there at 11pm in the evening - and they continued this routine all week.
Overworked accountants have already written off hours of billable time since the virus intensified and this charitable nature has extended to the job retention scheme. However, the conversation about being paid and how they’re going to be rewarded hasn’t come up.
But as one anonymous reader posted on Any Answers: “I have offered hours upon hours of free of charge advice and support these last few weeks: where do we draw the line?”
‘It just wouldn’t feel right’
Despite preparing detailed spreadsheets with most of the figures and calculations over the weekend, many AccountingWEB readers have opted against charging.
“It just wouldn't feel right sending them an invoice in these times,” noted AccountingWEB reader Sheepy306. The reader has done a huge amount of free work in the last few weeks and recognises that it's done nothing for their cashflow and financial position.
“I see it as an investment in our ongoing and future client relationship, it cements what is hopefully a good existing relationship.”
AccountingWEB reader Twa also decided against charging. “It isn’t anything like when auto enrolment came about,” the reader said. “They are going through some tough times, and it makes no sense for me to charge them for this when their staff need it more than they do.”
NH echoed this point. “[I]n a time of unprecedented crisis we have committed to work for more hours and make slightly less profit than we normally would... I am able to do that because I have built up sufficient resources and have the capacity to work seven days a week for a short while.”
'Doing free work isn't the way'
But the longer the lockdown goes on, some accountants are starting to rethink not charging a fee - even if it’s a token gesture of £25 per employer claim like AccountingWEB member and one-man-band Marky.
“The calculation on the spreadsheet takes time, the client and employee information gathering in order to complete the claims takes time... I know that I'm building up great goodwill with some clients but some would leave in a heartbeat without blinking,” writes the reader.
“Surely we must place even a small value on this amount of service. If you run weekly payroll and large payrolls then you have to surely charge something as the workload may be huge."
Bucking the trend, other readers actually had clients instructing them to charge. JD said: “I have clients telling me to make sure I do make a charge, despite my reluctance. I tend to support it, it's an investment in our clients' view.”
In my opinion, reactions to the COVID-19 crisis and the furlough scheme are being fuelled by emotions, which is understandable. Whilst being charitable and helpful is commendable, doing a bunch of work for free isn’t the way.
Are you asking the right question?
So, while many accountancy firms ponder how much they should charge, the question they should ask is what is the value to my client.
The value to your client is the level of service you offer or have completed. If you have already done the work and not charged or agreed on fees yet, then by default you have already lost value because now you are in a position of weakness to dictate the price.
If you do not charge for this service you are not only damaging your own business by simply not making a profit and there is also evidence some are even damaging their health over this.
By not charging for a service, you are sending a message that what you do has no value, and in turn clients will not always respect what you say. You are becoming the hired help instead of the trusted advisor you deserve to be.
You may be surprised to hear, your clients don’t really want the furlough scheme. What they want is peace of mind and not to worry. They really want things to get back to normal and for everything to be alright, and they want to know you are the go-to person to reassure and look after them, they will be happy to pay for that service.
You could add value and provide fast efficient service so they don’t have to worry and then package that with dealing with their PAYE, pension scheme, notifying the staff with the appropriate communication and maybe offering full HR and coaching support during furlough to make sure the staff are fully engaged for when the business returns.
Or do they just want some quick cash without spending a penny to get it? As the old adage goes, you can have a quality service, a cheap service or a fast service, but you can’t have all three come to mind.
Therefore to answer this question: Yes you most definitely should charge
How much depends on what type of client you have. If they are your ideal client, what other services are you including? How do you help them and ultimately, what value do they place on your proposition?
Unless you change the way you serve your clients and stop being a servant, you are doomed to a life of misery, stress, heartache and a load of work for which most of it you won't even get paid for.
As for the accountants fretting because they don’t know how to ask clients for money and organise how they’re getting paid, they should take solace in AccountingWEB user Johnny Fartpants. “Interestingly ALL clients have seemed more than happy with the fee when faced with the task of doing this for themselves. Likewise, I am feeling a lot better now that I'm not doing all this for free.”
That’s my two cents. But everyone's decision is different and is based on many factors. So are you charging a fee or are you processing the claims for free?
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Kevin Whitehouse has run his accountancy firm Prime Entry since 1991 and is now also mentoring other accountants on how to run their practice with less stress, more profits and if they want, less time...