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How to sack painful clients – politely

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29th Jun 2015
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Mark Lee considers how accountants can encourage those clients they don’t want, to go off elsewhere.

My eye was drawn to a report on AccountingWEB last week that “politeness in the workforce may be detrimental to UK businesses”. The research suggested that business managers were reluctant to initiate difficult conversations with clients. I wonder how often accountants are similarly concerned about losing business and not wanting to appear rude. Given how many accountants have clients they don’t like, I suspect this is endemic.

When accountants tell me about the challenges they face, only occasionally do they mention problematic and painful clients. Yet, the more we talk about what it would take for them to feel more successful, the more often this topic comes up. It’s one of those challenges that often hasn’t been recognised. Or, if it has, there is a perception that there’s little that can be done.

It often becomes clear that they prefer continuing to work for a painful client than to have to find a new client to replace them. It doesn’t have to be like that and the right sort of new clients can be found more easily once you know some of the techniques for doing this. And especially if you plan ahead and do not wait until you are desperate. But these are subjects for other articles.

Characteristics of a painful client

I sometimes refer to painful clients as the “D-listers”.

A-list clients are your favourites as they tick all your boxes; B-list clients are those with the potential to become A-listers; and C-list clients are no trouble but are also unlikely to ever pay high fees or refer valuable new A-list clients.  The painful D-listers are those clients, who, in an ideal world, you would be happy to lose.

Painful clients often include some of those who came on board when you first started in practice. You’ve acted for them for a while but the fees they pay are not economic from your perspective. You started off undercharging them and have never been able to bring them up to the full rate you now feel would be fair for the work you do.

The other most common type of painful clients are those you just don’t like. Again, some will have been with you for a long time and again, in some cases, their fees have not kept pace with changes in the services you have provided or with general increases in your fee levels.

You will also have your own criteria as to what constitutes a painful D-lister. I would suggest that these could be clients who display at least 2 or 3 of the following tendencies:

  • They resist any increase in your fee to reflect additional work they have requested.
  • It’s clear that they don’t appreciate that your time is valuable.
  • They insist you provide ‘gut feel’ advice rather than fully researched advice.
  • They seek detailed additional advice but are unwilling to accept that this will increase your fees.
  • They change the scope of your work and won’t pay additional fees for the additional work you are forced to do.
  • They frequently use buzz words and terms that they evidently don’t really understand.
  • You regularly have to chase them up to provide information or other responses to your enquiries.
  • They are rude or abusive to you, your partners and/or staff.
  • They refuse to take on board your advice about how to keep their records or what expenses can be charged through the business accounts.
  • They only produce key documents at the last minute.
  • They do not pay your fees in accordance with your settlement terms.

If you’re spending a disproportionate amount of your time working for D-list clients you owe it to yourself, to your staff and to your good clients, to ditch the most painful ones. 

Can I really sack a client?

Whenever I’ve asked accountants about whether they have sacked clients I hear the same two stories, by which I mean that their experiences are pretty standard. The accountant decides to get rid of a client by announcing an increase in their fees and either:

The accountant’s plan works as the client refuses to pay and ‘chooses’ to find someone cheaper; or the client agrees to pay the higher fees and comments to the effect that he thought he’d been getting a good deal!

Sometimes it’s the most challenging clients who agree to pay more rather than go elsewhere. “If only I’d insisted on higher fees years ago” is a common story amongst accountants who have sought to raise fees in an effort to ‘sack’ low value clients.

Sticking with the theme of this piece though, how can you sack a client professionally and politely? One key is to stick to indisputable facts and only reference the client’s behavior.

You could do this by phone or in person but at some point you need to set out your position in writing. This need be nothing more than a simple email or letter. In it you explain that the focus of the firm is changing such that regrettably you will be unable to continue to act for the client.

Depending on your relationship with the client you might also want to offer to introduce them to another accountant who is better placed to provide the services the client requires.  This recommendation could be to a new start-up who will appreciate the fees, much as you did originally, or to a key competitor who you don’t like!

Some accountants prefer not to offer any excuses. Instead they set out exactly why they are resigning. They might mention the consistent late payment of fees, late provision of records or how demotivated they feel after engaging with the client.

If you find yourself drafting such a letter when you are feeling angry or emotional, put it to one side. Have another look at it the next day and tone it down. This is easier when you are feeling rested and calm.

The more reasons you give the more you increase the prospect of the client challenging your view of events and/or promising to change. Would that be enough for you to want to continue acting for them?

Conclusion

Have you been holding off encouraging a painful client to go away? Was this due to a concern about losing business and not wanting to appear rude? Or simply because you don’t want to have to think about replacing the fees?

Let me offer you one last tip today. Think about who you would identify as your worst client (using whatever criteria you like). Think about how you could politely tell them to go away.

Draft your resignation email/letter – but do not send it, yet. Promise yourself that you will do that after the next time you win a new client paying you similar fees. It’s amazing how much of an incentive that can be to seek out such new work.

Mark Lee is consultant practice editor of AccountingWEB. As a speaker and mentorhe also facilitates The Inner Circle group for accountants and is chairman of the Tax Advice Network.

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Replies (24)

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By johncharles
29th Jun 2015 11:41

The best way

is to charge them an extraordinarily high bill. They then either pay up, and get their records back, or you give them a small discount. I have one client with 3 companies with 2 director's tax returns to do. I am considering charging them £5,000 for one company instead of £3,000 to get rid of them. They are constantly phoning me and emailing me saying that everything is urgent and must be done straight away. I am just recovering from a debilitating illness and cannot stand this constant pestering. They think I should jump to their attention on every subject.

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Replying to Mr_awol:
By jon_griffey
29th Jun 2015 12:39

How high?

johncharles wrote:

They are constantly phoning me and emailing me saying that everything is urgent and must be done straight away. I am just recovering from a debilitating illness and cannot stand this constant pestering. They think I should jump to their attention on every subject.

 

Of course it should be done straight away.  As every client knows, the accountant has no other clients and is sitting twiddling their thumbs waiting for their books to come in, when they will be able to give them their immediate undivided attention.

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Replying to Paul Crowley:
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By abelljms
01st Jul 2015 08:29

sacking clients
I thought I was the only person sitting around browsing AccountingWeb while waiting for a client to drop in some work

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By ShirleyM
29th Jun 2015 13:43

I am a non-believer in raising prices to get rid of clients

You run the risk that they will accept, and their unrealistic expectations will rise accordingly. It's best just to get rid and save yourself a load of grief and frustration.

No amount of money would make it worthwhile for me to tolerate crap clients.

Best to be honest and tell them why you want them to go. You never know, they may surprise you and agree (it's happened to me!)

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Replying to bernard michael:
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By JDBENJAMIN
30th Jun 2015 17:23

ShirleyM.....No amount of money?

There is nearly always a level of money that would make a troublesome client worthwhile. If you were offered £1 Million to service a small client, you would put up with a lot of trouble! You simply have to pitch your fees no lower than what would make the trouble worth it. Either the client walks, or you make a worthwhile fee. Simples.

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Jennifer Adams
By Jennifer Adams
29th Jun 2015 14:20

Disengagement letter...

... if you are thinking about getting rid or actually in the process of doing so a disengagement letter should be sent.

I've never lost a client (apart from them dying on me or closing down the business due to retirement) but this week I'd finally had enough of one client who has taken up all my time and energy since the last Sept when they came to me,....

I looked on accweb and used the below plus the ICAEW one as a template.

.See Jekyll and Hyde

https://www.accountingweb.co.uk/anyanswers/question/client-disengagement

 

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By Jekyll and Hyde
29th Jun 2015 14:43

I agree with putting such a letter aside until emotions.....

..... settled. I do this now quite often with email, rather than answer them immediately. After all we can all read more than angle to an email and I have fallen foul of rushing to respond to an email only to later regret the wording.

Back to the disengagement of a client. My view is that I run my business for myself and no one else. I believe I offer a very good service at a reasonable price, some agree some don't. When I have a client that for what ever reason I feel does not fit with my model I will disengage. Up until that point of disengagement I have tried to change/mould the client with little or no success. I do not feel that putting an increase on the price is warranted or indeed good for my business as quite often this will come at a cost. I read a thread the other week that asked are accountants too polite for their own good (or something along the lines) and I would say yes. Quite a lot of accountants are afraid to lose a client and, in my opinion, fail to look at the bigger picture that the only way we are going to improve our industry sector (micro/small business) is to stop acting for the rouges and channel them all down the same direction.

Many thanks JAAdams for the link above.

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By johnjenkins
29th Jun 2015 15:29

Honesty is the best

policy every time. You don't have to think of excuses or how to word it right.

Before action though, think about if this client has brought you in business or linked to others. It might well be best to keep them, as a supermarket has "loss leaders".

One point, Mark. You might want to think about what has gone wrong with the relationship you had when you first took them on. It could be that you are not offering the service that your client expected or was led to expect.

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By justsotax
29th Jun 2015 16:57

i do smile at the catergorisation of clients...

I wonder sometimes whether some see the 'A' category guys as the ones who ask the fewest questions, for the biggest fee which they pay in full and on time regardless of the service they receive.  Playing devil's advocate I wonder whether more time should be spent discussing the basics of great customer service rather than how to skin the client's for as much as you can in return for as little as possible...

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7om
By Tom 7000
30th Jun 2015 11:21

Its called work

They are all a pain in the [***]...stop complaining and crack on through it, its character building.

 

If you want to have fun go and watch Leeds Utd play or to Windsor for the Polo.

 

Just dont condone any illegal activity.

 

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By Katy D
30th Jun 2015 11:29

Don't make it personal

I have sacked a couple of clients for generally not heeding advice, constantly leaving it to the last minute and behaving like cornered dogs when things don't go their way.  I issue a disengagement letter with a covering note simply stating that we no longer have the resources necessary to support their business at this stage in their development...keep the personal side out...I have always received a very nice letter back from them wishing us all the best !

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By RogerMT
30th Jun 2015 11:32

Your engagement letter...

...should have clauses referring to the timely and complete presentation of accurate records and information by the client. If despite constant reminders they consistently break this clause, there's your "sacking" reason. I would guess this is the most common failing of clients, abusive clients being pretty rare in my (too long) experience.

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Stephen Youngs
By Stephen Youngs
30th Jun 2015 11:42

The hardest sort to disengage...

...are those you feel sorry for!

I have a client who runs (nominally) two shops. They are barely literate, but can fry an egg, make some tea, and buy stuff at a cash and carry so they want to run a business. I think they are only doing so as they would find it impossible to find a job otherwise. They are terrible at paperwork of any sort, the sort who put nasty stuff in a drawer. In fact I think they put all stuff in a drawer to avoid the headache of trying to cope with it! They don't bother me at all, rarely make any contact in fact. Don't use email, don't even use the telephone if they can possibly avoid it. Permanently penniless, behind with paying their tax (and penalties). Had to advise them to incorporate one of the shops (through gritted teeth) to avoid horrendous consequences with business rates and VAT if they didn't. Pay me a pittance, but they do pay the pittance and by monthly standing order too. But they're nice people, basically honest and hard working, and I empathise with the struggle of ordinary people to try to scrape a living amid what looks to them like an unfathomable pile of red tape. I have no idea who would look after them if I didn't! I expect they would just keep going without help and ignore everything until something horrible happens. Their bookkeeper faces similar problems, constantly chasing them for paperwork and then getting it months (sometimes a year) late in carrier bags.

I look upon them as a charity case to be honest, because if I didn't help them they could ultimately lose their ability to earn and who knows where that may lead. But if another potential client like them presented at the door I'd run a mile! Hopefully these days I would be wise enough to spot them.......

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Replying to Paul Crowley:
By johncharles
30th Jun 2015 12:28

Yes agree with you Stephen

Stephen Youngs wrote:

...are those you feel sorry for!

I have a client who runs (nominally) two shops. They are barely literate, but can fry an egg, make some tea, and buy stuff at a cash and carry so they want to run a business. I think they are only doing so as they would find it impossible to find a job otherwise. They are terrible at paperwork of any sort, the sort who put nasty stuff in a drawer. In fact I think they put all stuff in a drawer to avoid the headache of trying to cope with it! They don't bother me at all, rarely make any contact in fact. Don't use email, don't even use the telephone if they can possibly avoid it. Permanently penniless, behind with paying their tax (and penalties). Had to advise them to incorporate one of the shops (through gritted teeth) to avoid horrendous consequences with business rates and VAT if they didn't. Pay me a pittance, but they do pay the pittance and by monthly standing order too. But they're nice people, basically honest and hard working, and I empathise with the struggle of ordinary people to try to scrape a living amid what looks to them like an unfathomable pile of red tape. I have no idea who would look after them if I didn't! I expect they would just keep going without help and ignore everything until something horrible happens. Their bookkeeper faces similar problems, constantly chasing them for paperwork and then getting it months (sometimes a year) late in carrier bags.

I look upon them as a charity case to be honest, because if I didn't help them they could ultimately lose their ability to earn and who knows where that may lead. But if another potential client like them presented at the door I'd run a mile! Hopefully these days I would be wise enough to spot them.......


I have one client like that and have acted for him since 1985. He did a few years ago get a Sage package and put his records together quite admirably for several years. Then, because of working round the clock due to clients all over the world, he snapped and left it all to me in carrier bags. His is just a complete lack of time and he doesn't mind me charging him £75 per month so that he can concentrate on what he knows. He has finally given up splitting up his business into sole proprietor and 3 partnerships to avoid going VAT registered and thus I will have less work for a fee of £125 per month for accounts, tax returns and VAT.
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By Ian McTernan CTA
30th Jun 2015 11:49

Accept that some clients will be more work than others, and factor that in.

Know that they will be last minute?  Factor that in- it's not that hard to plan ahead to free up the time for the last minute people.  Charge a higher fee for this service- and explain why you are charging more for premium time.

This year I was so good at getting people to send in paperwork that I actually had nothing major to start on 31 January and finished the day early (then again, I'm a small practice).

Learning to deal with all sorts of clients is good practice - but if it gets to the stage you really can't stand it any more, write to them or better yet get them in and politely discuss the issue with them- you might be surprised by the results when they realise how their attitude and shoddy practices impact on you.

I used to get rid of a couple of clients a year in my early years in practice, but now it's no longer necessary.  Last client I 'lost' drifted off into doing some strange therapy type MLM thing and completely lost touch with reality (as well as giving up a £200k a year gig for £0 earnings).

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By AFAccountant
30th Jun 2015 11:58

Unwanted Clients

I have asked two clients to leave in the past but in both cases it was because they had been abusive, which I believe shouldn't be tolerated by anybody.

As for difficult clients I expect a certain number.  

Please feel free to pass on any clients that you don't want to me, I will happily put up with a certain amount of hassle for a higher fee.  I will even pay you an introduction fee so that you can celebrate their departure with a bottle of bubbly!

 

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By mabzden
30th Jun 2015 12:07

I disagree with the article

I read the characteristics of the bad clients and I don't really agree with them.

These articles often make out accountants as fee-earning machines, and supposedly we all wake up every morning wondering how we can maximise our fee income for that day. That may go on, particularly at higher levels in large firms, but your average small practitioner wants to enjoy their job, have happy clients, earn a comfortable living and achieve a good work-life balance.

Nobody likes paying fees, so I think most clients (quite rightly) are going to resist, or feel unhappy about, a bill that's bigger than the last one. That's why we all still work and are not sitting on a beach somewhere with millions in the bank. And clients are less likely to resist if you're giving them a good, personal service and keep them informed about potential costs.

All the bits about being disorganised and supplying paperwork at the last minute are also pretty standard, certainly when dealing with individuals or very small businesses.

So a lot of these "problems" are just part of the job, and one of the skills an accountant has to learn is how to deal with these issues and stop problems getting out of hand. Very occasionally you try everything but it reaches the point where you have to resign, and the resignation part itself is easy. But you then should expect bad feeling, lots of moaning and a difficult hand-over to the new (and very unfortunate) accountant.

 

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By Lord MacLeod
30th Jun 2015 13:02

sacking clients.
When I started my practice I had the good fortune to have a family friend who is an Accountant, she read my contract and advised me to add a new clause 13, it simply says "I have the right to withdraw my services without penalty at any time for any abuse and or misconduct by you the client whatsoever". It covers everything and none of my clients has ever made any comments or remarks about it. Happily I have never had to use it.

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By jamiea4f
30th Jun 2015 16:20

Losing clients

I think in general those that want to pay the least are those that you dont really need.  I had one client who paid me my lowest fee for 4 years and resisted a price rise every year, until finally she found someone even cheaper than I was called Fixedfeetaxreturn - guess it says it all really.  So in the end all of my service and advice was quite easy to lose for the sake of a few quid.  The majority (probably 90%) of clients are on a monthly standing order and if one gets missed then work stops, and if a second one is missed they are encouraged to look elsewhere.  Its a shame because as a small business most of my clients I consider to be friends as well, however as we all know with some friendships it only takes monetary involvement to send things sour!

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By ShirleyM
30th Jun 2015 21:13

No. Let's be realistic

The amount of money they are willing to pay (and it wouldn't be £1M) would not compensate for having to deal with PITA clients. I don't chase money for the sake of it. I prefer to enjoy my work and my life, even if it means earning a little less.

I consider myself very lucky to be in that fortunate position ... but then I've never hankered after flash or expensive possessions. 

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By redboam
01st Jul 2015 01:48

Unimpressive

I am hoping that none of our clients read this article or the comments. Some of the content gives the impression that we are all a bunch of arrogant money grabbers. The illustration that accompanies the strapline is particularly inappropriate.

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Chris M
By mr. mischief
01st Jul 2015 06:22

Yellow card, red card

In my experience a YELLOW CARD letter has a 50-50 chance of converting a troublesome client into an excellent client.  So for example in the last one I wrote - 4 June 2015 - it said:

"In order to do a proper job as your accountant, I need:

Contact details, especially a phone number you can be reached on.  Ideally please complete and return the enclosed new client form which includes data needed for compliance with anti-moneylaundering laws.If you are not doing the new client form, please supply the information needed in the anti-moneylaundering section of it towards the bottom.Accounts information – see 2 below.Explanations on VAT and corporation tax – see 3 below.Accounts Information NeededDetails of sales invoices raised after 30 June 13 and up to 31 July 14.Company bank statements, andDetails of any expenses – for example mileage – which did not go through the company bank."

This new client had got in a mess with his previous accountant and the limited company accounts to 30 June 2014 are overdue.  The result of all of this:

1.  My fees for filing the 2014 accounts have been paid in full.

2.  All of the above information, and more besides, is with me.  We will be filing at Companies House and HMRC today.

3.  I have the company bank statements, downloaded to Excel, up to 26 June 2015.  So 2015 accounts are imminent.

In my experience, a yellow card letter - with a deadline, which in this case was 30 June - pretty well immediately sorts out the time wasters from people who perhaps are not taking business admin. as seriously as they should.  For the time wasters, on the deadline I follow up with a red card - disengagement - letter.

Over the years I have had around 10 clients who have never filed on time with previous accountants, and never failed to file well before every deadline with me.  Set out your stall early with all new clients.

 

 

 

 

 

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By raybackler
01st Jul 2015 10:35

Respect

I have only one criteria for a client relationship, which is mutual respect.  I respect them and their business.  They respect me and my business.  With a respectful relationship, I can put up with paperwork arriving late or asking for some additional work to be done urgently and the odd client paying less than they should, for historical reasons.

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Teignmouth
By Paul Scholes
02nd Jul 2015 10:08

Relationships

For anyone who has had their head in the sand for years or who is just starting out, Mark provides a great summary of all the warning signs that a bad relationship is developing, or has been reached.

Within that framework however are a bunch of relationships and no list or spreadsheet, even one ending in a "D" can cover all eventualities or outcomes and, as others have commented, it will (or should) take effort, assertiveness, professionalism and honesty to deal with each case.

Some firms will take the view that clients are just money making cells on a spreadsheet and so will balance grief, and sometimes their own inabilities, with a sliding scale of fees. I and others will take Shirley's and Ray's view that it's the quality of the relationship that's important. The easiest and best fees are those that come from a satisfied client and adviser.

Whilst, in a busy world, it is inevitable that we will all need to stop and take stock like this every year or so the aim should be to be able to recognise potential poor relationships as they develop and so avoid the grief and this will quite often result in us having to be honest with ourselves, it isn't always the client who is unsuitable; johnjenkins writes:

"You might want to think about what has gone wrong with the relationship you had when you first took them on. It could be that you are not offering the service that your client expected or was led to expect"

Many years ago a particularly bothersome pest of a client (Mr Almost D) left a message on my answerphone along the lines of "something has come up and it's essential I see you this afternoon".  I had time to think and so, even though I had left myself a completely free afternoon for "me time", I called him back and said "No" not possible, but could see him in 2 days time, and, to my surprise, he said OK. Over the months this lead to a similar series of "No"s with this and similar clients, in fact it became a bit of a habit I enjoyed, but it helped redress the balance of the relationships.

 

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