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Should you be charging for COVID-19 related work?

30th Apr 2020
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By Carl Reader - Chairman at d&t Chartered Accountants and Head of Accounting (EMEA) at Practice Ignition

What I wanted to do today was to talk to you about pricing. It's been a real hot topic recently and I've seen much of the debate, certainly on social media (and here on AccountingWeb), around whether firms should be charging for furlough claims and other coronavirus-related work that they're undertaking now.

Now I understand why this is such an emotive and a hot topic. It's potentially the one thing that can make or break our firms this year, whether that's from a financial performance perspective or whether that is from a retention of our client's perspective. And I get both sides of the argument. So what I'd like to do is just share both sides and present the cases, as it were.

But what I can guarantee you is I'm not going to dictate in any way what I think you should do. I'll just hopefully steer you towards what could work for your practice, both now and going forwards.

You can watch the video or continue reading below...

So the argument is this, do we charge for furlough claims or not? And some practitioners have taken quite a militant view that no, they absolutely should not charge for it. "How dare other people charge for it? Why on earth would you charge businesses that struggling at the moment?" Other practices have taken the view of, "It's extra work. It takes time. We can't upload a spreadsheet or CSV file until there are a hundred employees, so if there are 99 employees, that takes a few hours." And look, I feel that pain myself. I've currently got 7 team members devoted full-time to furlough claims right now. That is a not-insignificant cost.

There is no one size fits all approach

There are a few different sides to it and, as I say, there is no one size fits all. The things that you need to look at when coming up with your pricing for furlough schemes, in particular, is, first of all, the relationship that you have with your client. Do you have a relationship that's very transactional in nature? And I mean that in the nicest possible way. But do you charge individually for accounts preparation, for tax return preparation, for payroll submissions, and so on. If so, then it's probably appropriate that you charge on a similar basis. Or do you have an all-inclusive fee? In which case, it's probably appropriate that you don't charge separately.

How do your clients look? Are your clients typically businesses with few employees that are quite long term or do you perhaps have a lot of clients in the fast-food sector or retail or pubs and clubs, where there's a transient workforce potentially even paid weekly? That has a massive impact on the impact to your workload of doing this stuff.

But I think most importantly, and I really can't stress this enough, don't take your pricing advice from the loudest voices on social media, on videos. You need to do what's comfortable for you and what's comfortable for your clients because ultimately the market will decide the appropriate route forwards.

Now I will happily share with you what we've done at d&t. So at d&t, we've charged effectively the equivalent of another payroll run for the processing, which we think is a fair approach given the types of clients we have and the types of charging models that we have. I've seen practices charging hundreds for these claims and I've seen practices bundling it. I think the answer here is that certainly based on 240 characters on Twitter or a LinkedIn post, there is no right answer.

What is the best approach for pricing?

And that brings us perhaps to the wider question of pricing, and it's a topic that I'm actually really pleased to be hosting a panel discussion at the Accounting & Finance Virtual Summit. Why? Because no one person has the magic wand for pricing. We've all got ideas of how it should be done. We've all got ideas of the best approach. So I'm really looking forward to speaking to some of the foremost pricing experts to get their opinion on things like should you have a menu of services? How would you go about value pricing? What should you do when it comes to different levels of services? Should you have three tiers of service? I've got my own personal views on it, but my personal views might not be right for you. They might not be right for somebody else. The individuals on the panel might not have the right views, but if you understand all of the elements that go into pricing and understand some of the psychology and science behind it, it will help you make sure that your practice is as profitable as it can be.

 

Carl Reader - Practice IgnitionCarl Reader is chairman at multi-award winning firm d&t and Head of Accounting (EMEA) at Practice Ignition. Carl serves as Chair of the Practitioner Panel at ACCA. ​Carl is widely recognised as a thought leader in the accounting profession, speaking globally to accountancy audiences about a range of topics. He has been recognised as one of the leading voices on social media by ICAEW, is regularly featured in the accounting press, and was formerly a member of the Accountancy Age 35 under 35.