COVID-19 puts pressure on firms and their fees
As clients question whether they’ll have a business in the months to come, accountants are also assessing the damage the virus will have on their finances and fees.
Since the coronavirus outbreak intensified, accountants have delivered cashflow forecasts and planning for clients whose businesses are crumbling.
These accountants are working around the clock to rescue their clients' businesses, but they also have their own business to run.
But accountant after accountant has admitted on Any Answers that they’ve done hardly any billable time as they’ve fielded their share of "what am I going to do" calls and emails.
AccountingWEB reader Ireallyshouldknowthisbut is one example of one of an accountant who has decided to not charge a single penny more, despite the extra work they’re doing.
“We are taking the long term view,” said the reader. “You help people out when they are down, and they will go on being a client for many years, as opposed to trying to wring the maximum amount of fees out of them before they move on elsewhere,” said the member.
It's a similar story for Ohgoodgodno, who has given the majority of last week for free to help clients plan for the uncertainty ahead and will then assess each client case as and when the client raises the issue.
However, others like AccountingWEB regular Mjshort are taking a more altruistic decision and are reducing fees by 50% for clients affected the most by the virus. The reader is not going to recharge the amounts later in the year, stating that they’re “trying to help my clients get through this”.
Reducing fees or pro bono work are not the only options accountants are deploying to help clients keep the lights on. Michael Beaver, for example, has decided to allow clients to pay that annual fee over time, rather than reduce the fee.
JenniferAdams summed up the mood of the community when she said: "Clients who get through this will remember your help and stay when things get better."
"The USP given on nearly all accountants websites is ' we care about you and your business'... now is the time to put your money where your mouth is as they say."
But it's a difficult balance. AccountingWEB member Luke was one of many who was hesitant to offer a blanket fee reduction: "Some clients will always [exploit these schemes] and those are the clients for whom the business will continue as normal and they will still want a reduced fee or say they are struggling when I know very well they have less income but are definitely not struggling."
Charge for your time
And there's the rub: while accountants offer fee holidays for virus-hit clients, this short term remedy is not sustainable - especially when you’re doing an additional 40 plus hours of pro bono work.
After all, the recent virus support packages by the Chancellor have resulted in firms receiving an influx of client requests, which range from simple "hand-holding" exercises to full-blown business plans to support loan applications.
Without the capacity to provide unlimited free advice, smaller firms are taking the “before you assist others, always put your oxygen mask on first” approach.
“If we spend all our time attempting to freely assist clients with keeping food on their tables, who will then assist us in putting food on our own tables?” confessed an anonymous sole practitioner on Any Answers.
The reader accepted that their stance to charge for time spent carrying out extra work may seem “insensitive” but argued that the client would obtain benefits, loans, grants, and lay-off funding.
They continued: “The question is basically whether the correct thing to do is to over-work, take personal risks with health and finance, and lose our own businesses, in order that we may ensure clients are as unaffected by the situation as possible?”
What will it take to survive?
More firms will be considering fees in the coming weeks as their client list withers away. Niches such as hospitality and leisure sectors have particularly taken the brunt of the economic blow.
And it’ll be a double blow for some firms who have lost clients due to the recent IR35 changes.
With client likely to fade away, many accountants are asking the same questions as their clients. “Lots of our clients are going to park their businesses for three months and are going to struggle to pay our direct debits. That, in turn, leaves us with no revenue,” said Manchester_Man.
To mitigate the impact of the virus, some firms have already asked staff to take a pay cut, as one anonymous reader posted on Any Answers. Such is the percentage of the cut, the reader doesn’t think they’d be able to manage, yet at the same time their “refusal to accept could lead to you being pointed towards the door”.
With revenue going down, many practices are looking to the government’s coronavirus support package. AccountingWEB reader Razertoo has furloughed their only member of staff “until the mess is over”.
Panic has started to dawn on Fellowcraft, too. Although they’re still wrapped up in answering the deluge of client calls, they’ve realised that their turnover is likely to drop more than 50%.
But like many other one-man bands in a serviced office, they won’t qualify for SBRR grant, and they still have software subs to pay.
So, fees are just one aspect of surviving this. Firms are looking at the long, long stretch of weeks ahead, and they don’t like their chances.
As Wikoskip puts it: is survival for firms “ultimately going to come down to circumstances outside our control?”