“It’s not lowballing fees,” wrote accountant and digital practice owner Elaine Clark on Twitter. “It’s charging the right price in the technology-led 21st century”.
This side of the accountant’s fee debate surfaced in response to a recent AccountingWEB article on whether a lowballing trend is hitting the profession.
One example Clark used to undermine the undercutting argument was the demise of the once-dominant Blockbusters video rental store. Now a boarded-up tombstone on the high street, the store’s slow response to technological revolution acts as a reminder to all businesses, including accounting firms.
Just as the rental store’s customers turned to cheaper and more convenient solutions like Netflix and Amazon Prime, does the same fate await firms who don’t address their fees?
There are always going to be ‘bottom of the barrel’ clients looking to drive down prices, but has the rise of technology displaced the accountant's expected fee structure? Has automation pulled back the wizard’s curtain? To address the fundamental question: are accountants charging too much?
The rise of cloud accounting
When Making Tax Digital for VAT-registered companies comes into play, Clark believes the fee bubble will burst for the compliance-based marketplace. Speaking to AccountingWEB, Clark said: “When companies start seeing that HMRC is sucking up their data on a quarterly basis via a system that integrates directly to them with little manual intervention… then we get into the era when people are opening up to the question: what value is my accountant actually adding?”
As an example, Clark was recently approached by a business owner who complained that they pay their accountant the best part of £2,000 a year and doesn’t know what they do.
“I write up all the bookkeeping. I analyse all the costs. When they query something it's because they've overlooked it on the spreadsheet and the information that I am providing,” Clark recounted the business owner saying, “and in her words she said, 'it's like the accountant is redoing the work I've already done'.”
Another example involved Twitter user ataaccounting. To the shock of a number of respondents, he revealed that he knows a firm that charges £300 to claim employment allowance each year.
No. Not kidding. When the allowance changed from 2k to 3k they put their charge up £100. I have seen and paid their invoices when b/keeping
— Andrew (@ataccounting) August 29, 2017
Clark’s viewpoint was echoed by AccountingWEB members such as Reado, who has seen examples of accountants overcharging.
“Whilst some firms do deliberately low ball to ensure they get a potential new client, there is definitely a lot of firms that grossly overcharge their loyal clients. I have picked up clients over the years and after completing their accounts I have no idea how the previous accountants justified the fees charged,” said Reado.
The AccountingWEB member has seen client retention levels soar thanks to charging what they describe as “fair fees”.
The counter argument is the added value accountants can provide to their clients. For example, in the comments section to the original article AccountingWEB member Ian McTernan reasoned his value over price positioning.
“If you provide a personal service and get to know your client's business and understand them, they will pay what you ask,” he said. “If you operate a 'fee mill' then expect high turnover of clients as they discover what you promised in the one time they ever spoke to you before being passed off to some fresh faced junior isn't at all what they deliver.”
Underpinning that thought, author and coach James Ashford warned accountants from getting into the game of undercutting and charging less. “You have to stop competing and start dominating, and the only way you can do that is by looking at the value you can bring to your clients, clearly communicating that value and then finding the clients who are prepared to pay more.”
However, the added-value model is not always black and white. For every proactive accountant who genuinely offers a personal service and offers value, another hijacks the phrase.
Clark argued that some additional services such as tax planning or contract reviews should not be crowbarred into the services to justify high fees.
“If something new is introduced to the budget like the dividends tax you can communicate that to the client but realistically that should be part and parcel of what you are doing,” she said.
Otherwise, these services should be offered as a separate entity when things have changed in someone's life or business.
“The days have gone (for some people they still need to go) when the fee charge is wrapping up these things that clients no longer need.”
What is a trusted adviser, anyway?
As for being a ‘trusted adviser’, Clark believes that if the service is delivered by an accountant who's a member of a professional body and therefore governed by the code of ethics and standards, then it makes “no difference” whether you pay £5 for it or £50 for it.
The fact the Yellow Pages will cease printing the chunky directory after 52 years is a stark reminder that business models change. For the accountants who do not evolve, whether that’s by price or through quality of service, they’re likely to lose clients.
According to Clark, the problem is that fee push down is already happening, and if firms do not adapt and go digital they will die.
“It's going to happen,” said Clark. “If you want your business to be around then they need to do something sooner rather than later and realise that these are no longer lowball fees, these are fees.”
What do you think? With the prevalent use of automation are accountants now charging too much?