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Beancounters not negotiators: Time to redefine?

Negotiating new business can be a thorny subject, especially when it comes to sensitive conversations like fees. Norman Younger highlights some negotiation troublespots. 

21st Sep 2020
Director Maximiti Limited
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The setting is a traditional accountancy practice inside the practitioner’s office. The actors are the aforementioned beancounter and a new prospect.

The background to this meeting, distanced of course, is that the prospect is seeking to get “better” advice, as well the routine compliance work, and pay less for the whole package. After the usual chit-chat, the meeting draws to a close and the taboo subject of fees rears its ugly head.

Prospect: “What are your fee going to be?” (The previous firm charged £1,450.)

Accountant: “£1,350.” (Simply because it is less than the erstwhile accountant charged and the assumption is made that £1,450 had been the “correct” figure.)

The prospect signs up and is very happy as she will be getting “better” advice for less money.

The accountant is happy as he has signed up another £1,350 of fees.

Too simple to be true? Regrettably not.

When the time comes to invoice after the year end accounts neither the client nor the accountant will be happy. Guaranteed!

Why is this so and what could have been done differently?

This is a business deal, whatever way you look at it. So, why are these discussions handled in such a predictably unsophisticated and cack-handed manner instead of being approached like a proper negotiation with all the preparation that it entails?

Many business owners would act similarly but the problem is exacerbated with accountants because all too often they see themselves as professionals and not as business people – a distinction that is no longer the case. For many firms, the mere act of winning a new client, especially when they are moving across from a competitor is an end in itself. Not forgetting that helpful £1350.

Our accountant is clueless as to how much time will go into providing that “better” advice that is being sought, which no doubt has been enshrined in the letter of engagement in a format that means one thing to the client and another to the accountant.

Even the annual accounts preparation itself lends itself to potential problems. Our accountant has assumed that the previous incumbent charges on a similar basis to him and has similar overheads. In fact, the assumption is that the fee reflects the true market rate but perhaps this was a discounted rate for one reason or another. Maybe advice was not rendered because the client baulked at the cost.

Who knows? The client may have an inkling and that could be why they are moving – because the fee had to rise this year.

There are lots of variables with a complex interwoven web of unknowns. Just like a conventional business deal.

Next time I’ll look at how to handle the situation wearing the negotiator’s hat and achieve a far better outcome, for both parties. 

Replies (7)

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By David Winch
22nd Sep 2020 10:34

A very helpful piece of scene setting, Norman. I particularly like your use of "parties" at the very end.

The desired outcome of every negotiation is to work together to arrive at a solution that delights and continues to delight everyone - in other words, a 'win-win' outcome. When some people use adversarial, even military, language such as "sides" it betrays their lack of commitment to achieving 'win-win'!

David Winch
Sales & Marketing Consultant, Cambridge

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By johnjenkins
22nd Sep 2020 12:31

Negotiating is very simple. If the client thinks the previous Accountant was too high then you lop off a bit for the first year then say we will discuss fee for second year after doing first. That way you can say "actually you previous Accountant was, "way over," "about right," or "too low"". New clients you do the same thing but put your own fee on first year. By doing this the client will know that you are actually looking at the fee and not just sticking a bit on each year.

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By indomitable
22nd Sep 2020 16:46

Spot on! But you didn't explain how to negotiate.

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Replying to indomitable:
By Norman Younger
29th Sep 2020 19:45

That is part 2 but you can have a wee look on my website to get a heads-up!

How to do it and pulling it off....not unlike armchair pundits during MOTD !

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Replying to indomitable:
By Norman Younger
29th Sep 2020 19:46

That is part 2 but you can have a wee look on my website to get a heads-up!

How to do it and pulling it off....not unlike armchair pundits during MOTD !

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By turchyna582
22nd Sep 2020 18:30

The fact is that from a technical perspective, a significant amount of information (especially for tax) is already in the public domain - and moreover HMRC seem keen to encourage clients to DIY!
Use of software is constantly encouraged - despite it not guaranteeing business success.
Given the current generation's aversion to any advice given which conflicts with google or social media; you can be quite sure that it is the relationship (and not the technical) that will matter to them - especially if they are in the position of being successor(s) to an existing business owned by earlier family generation(s).
Added value (which all clients like to obtain), is based solely on their perception of 'value' - and that should be the starting point for determining how you (as an individual or firm) can meet match that perception.
What anyone else charges or has charged is irrelevant. The value of a committed, ongoing, candid and mutually supportive relationship does not have any 'base figure' to work on; that is the negotiation.

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Replying to turchyna582:
By Norman Younger
29th Sep 2020 19:48

Problem is, the "fee" is what it is all about for too many , on both sides of the equation. There is a failure to grasp that true value is worth paying for, maybe because it can be hard to feel where the value lies.
When the tax bill is £12500 instead of £15000 that is not tangible in the same way as a refund because the accountant has gone to town on R & D claims or whatever

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