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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.

31st Mar 2020
Editor AccountingWEB
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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.

Reduce fees

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?”

Replies (20)

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By 0098087
31st Mar 2020 09:35

We've sent out emails to everyone explaining the job retention scheme..but do they read them..NO. Then they phone..and email..where's my money..what do I have to do..

have had to turn call waiting off..can't deal with the constant beep beep beeps..6 vms in 20 minutes..just can't deal with it....

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By hibees07
31st Mar 2020 13:59

I agree entirely.
Information sent out but nobody seems to want to read it and all expect hand holding all the way through the process. Very difficult for sole practitioners to cope particularly as we move into financial year ends and all that comes with that
Thinking it may be a good time to retire!

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By GHarr497688
31st Mar 2020 19:37

in my case I cant claim any income back.

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By mkowl
31st Mar 2020 09:39

Be interesting whether the likes of the Software companies will reducing their fees to help accountants. It is interesting when doing your own firm budget how much gets sucked out before you even start

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By Ah Choo
31st Mar 2020 10:55

We've just had our BTC software price renew through and it's nearly 6% higher than last year on the same products so I think the answer is no sadly :-(

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By GHarr497688
31st Mar 2020 19:39

IRIS are sending out emails asking offering hosted services and god knows what. I really can't deal with it all.

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By raybackler
31st Mar 2020 10:18

Liberty Accounts have given a free fee period to all of their charity clients until the end of May, when they will review it. Got to applaud that action, because charities are being hit hard.

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By Susie2012
31st Mar 2020 10:23

Accountants have been put in a very difficult position indeed...
Software companies have not lift a finger to help, still continue with their extortionate fees, despite we have sent our emails to clients as well as postings the updates in social media.. none of the clients bother reading them..
They just pick up their phones, called, text to ask " can you apply for the grant for me", " Are you processing the job retention scheme for me", " when can I get the money".....
All these people have forgotten accountants have families to feed to, we are human too...
The whole situation is very sad and depressing ...

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By GHarr497688
31st Mar 2020 19:40

I'm getting this reaction too....had enough I think I will shut up shop , let all the other Accountants sort it or HMRC .

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By Ruth75
02nd Apr 2020 12:22

I'm a sole practitioner, work from home and sick myself this week. It's been really tough.

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By Susie2012
02nd Apr 2020 15:29

It is a difficult time , but hang in there and hope you will get better soon.

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By Ruth75
02nd Apr 2020 12:25

I'm a sole practitioner, work from home and sick myself this week. It's been really tough.

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By Rgab1947
31st Mar 2020 10:27

Doing a lot of advisory which in the past I did not really charge for as normally only 10 mins at a time. That is now 1 hour+ at a time but doubt they will entertain a fee for that hour. So yes more work less fee.

But for the rest I still charge and will not reduce my fee. Time to pay, yes. I have my expenses too and get zero help from Gov and none of my suppliers have given me any leeway. Software house talk help but it boils down to reduced support as they have staff off or furloughed.

I say again, I am not a charity and also need to put bread on the table. Fortunately my clients are continuing to pay for now.

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By [email protected]
31st Mar 2020 11:03

Professionals need to be trained in problem solving and time must be chargeable.
Professionals need to be more specialised as regulation and business becomes more complex.

The problem here is a much more long term one, in that firms have evolved through a culture of clients accepting what they are told. Now they are much more demanding and Accountants have not changed.

Building commerciality skills requires the leadership of the firm to embrace the change and drive it throughout the firm. They need to develop deep insight of their clients' business, sector and the wider business world. Develop Key client management, client feedback, sector groups and knowledge management functions.

In essence they have to redesign the client experience to provide more added value, this will lead to higher fees and not forever competing on price.

Professionals are concerned about being sued if they give commercial advice or contravene professional regulations and not confident about having broad business conversations with clients.

I am happy to speak to anyone who wants to know how.

www.rwprogressive.co.uk 07771 871 757

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Jennifer Adams
By Jennifer Adams
31st Mar 2020 17:23

Do they read what you send out you ask?

Well actually mine have.

But I've tailored each email to the different types of client so they are not bombarded... which is what I told them at the beginning. I said I would only send what I know was correct.

I've sent separate one email to the self employed following the Fri announcement, one to the shops etc that I know will have to close down and a couple more to the directors so they dont get confused and have to search through the standard email for all.

And I have been thanked.

I've seen some accountants just send a blanket notice to all clients.

I've also directed them to the FSB webinar and many have taken up the suggestion.

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By Refs1
31st Mar 2020 22:30

Been a while since been on AW.

It is indeed difficult times, phone calls up 1000% last Friday, similarly with emails and 3 staff self isolating. Fee earning time down.

We are old fashioned firm so not social media savvy nor do we want to be as most client are loyal and prefer personal service.

Filing of Vat returns still need doing and payroll returns for year end need sorting. No peace, quite enjoying it as got in a comfort zone. Best thing I did this week was use the do not disturb on my mobile and an automatic reply on the email then return the calls after the urgent work is done. Majority of clients have been great, just one who needed reminding that the have created there own issues, the one who said my mate accountants can do better - told them to go and see the mate then, they soon changed there minds! Be interesting times. Stay safe.

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Tornado
By Tornado
01st Apr 2020 00:28

16 days in a row now working long hours and no time to record what I am doing anyway.

There are difficult decisions for clients to make and not much time to make them and the lack of accurate information from the Government means that advice I am giving to some clients is not always correct.

I shall force myself to have Sunday off.

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By I'msorryIhaven'taclue
01st Apr 2020 14:20

Tornado wrote:

There are difficult decisions for clients to make and not much time to make them and the lack of accurate information from the Government means that advice I am giving to some clients is not always correct.


That's a big worry: how many of our clients for whom we are currently feeling sorry and trying to help will point their finger / liquidator / solicitor at us and say "My Accountant told me to..."? Some of their critical decisions, and our legal duty of care, which appears correct now may later be overtaken by the twists and shifts of governmental developments.

Tornado wrote:

I shall force myself to have Sunday off.


Sunday lunch and a couple of pints in the pub? a stroll in the park? watching Spurs win at home? Do you a power of good!
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By Open all hours
01st Apr 2020 17:17

Expect clients will be given time to pay, nothing new there because the monthly SO and the annual uplift conversation never appealed.

As for communication, pleased we have a long established weekly client email. Yes it covers them all and some slight off topic subjects but they do read it because it doesn’t read like an HMRC handout and it is sometimes deliberately provocative. Anything to keep them reading it.

Guess it helps if you are a frustrated journalist who just happens to be trapped by the numbers.

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By Open all hours
01st Apr 2020 17:21

Also used Social Media with great care. Paul Lewis and Martin Lewis are very different animals.

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