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Onboarding: To fee or not to fee?

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The client onboarding process can often be a time-consuming and tricky affair for a practitioner and there is also the cost of the software. But in a recent webinar with tech editor Tom Herbert, two practitioners found themselves on opposite sides of the debate on whether to charge.

11th Oct 2022
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Conversations around incorporating fees into the onboarding process have been bandied around in accounting circles as a way to ease the pressure of this essential, yet complex part of accounting life. Yet, many practitioners remain on the fence on whether to pull the trigger on an additional fee for the client.

In a recent AccountingWEB Live episode of Tech Pulse, the discussion on onboarding fees left panellists Izzi Rosenberg, associate and chartered accountant at Harris Rosenberg, and John Toon, tech strategy lead at Beever and Struthers, on opposite sides of the argument.

A professional service?

Talking about his own experiences with incorporating onboarding fees into his practice, Rosenberg said that it made sense for his firm, arguing that “if you want a job done properly, there has to be money involved.”

“The risk is that if you're not charging for the onboarding process, then you're not allocating any resources or any people to do it and it can just fall by the wayside and get stuck at the back of the queue.” Rosenberg said.

"That's the first impression the clients are going to get of you. If it's not done properly, you're not giving them a very good start to your services." 

Charging anywhere from £200 for smaller clients and sole traders, to £1,000 for much larger accounts, Rosenberg said that he found that clients appreciated a positive start to their professional relationship with his firm.

“This is why I've mapped it out as a process because now I see it as an actual product. By having [clients] on-boarded properly, then that will ensure that the rest of the services run smoothly.”

Questioned on how his clients have reacted to the fees, Rosenberg said that most were happy to pay when the process, as well labour involved, was explained to them.

“I've found that, as long as it's explained in the right way, people understand that we're not a charity - we're there to earn money. We would never suggest that they do work without being paid for it.” Rosenberg said.

Adding, "It can often be rolled into other sort of one off charges when you take on a client so that could be, if you're incorporating a new company for them or you're registering for VAT or Pay As You Earn"

Holding fire on fees

Toon on the other hand, had not taken the plunge into onboarding fees, noting that neither he or his firm had considered making such a change to his firm’s pricing until the point was raised in the webinar.

And while he understood Rosenberg’s reasoning as to why his firm charged for onboarding, Toon found himself leaning towards a “pain free” process for clients.

“I see this as being a sort of sunk cost of taking on new clients,” Toon said, adding that  “if you get your recurring fees priced correctly, you will more than recover the cost of onboarding in the future on the basis that most new clients can be reasonably sticky.”

This style of pricing, however, is what best works for Toon’s firm, he argued, noting that his team doesn’t tend to have one off transactional clients in their space.

Finally, in contrast to Rosenberg, Toon believed that, rather than spending extra time and resources at the start of the client relationship, firms should focus on making the onboarding process as painless and swift as possible for both client and firm. He added that investing a client’s money into the onboarding process is asking for trouble if things go wrong.

“Making this process as pain free as possible really is to reduce the burden on us as a firm and for clients equally so that you will not waste too much time on this process. But also, it stops us from opening ourselves up to the risk of not doing a proper job.” Toon said.

What are your thoughts regarding onboarding fees? Let us know in the comments below.

For more insights from both Rosenberg and Toon, catch up on our recent episode of  Tech Pulse with Tom Herbert.

Replies (28)

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paddle steamer
By DJKL
11th Oct 2022 10:32

Do the work properly but do not expressly charge for it.

It is a pretty poor sign for a professional if unpaid tasks are apparently not done correctly but paid tasks are, service always trumps profit as in the long term it saves the firm money. (Spending vast amounts of time chasing new clients because you are unable to hold onto the ones you already have is frankly stupidity on stilts)

Accountants are either professionals or taxi drivers with a fixed front end cost on the meter as soon as the client enters the cab and before they have travelled an inch.

If you are taking on new clients why on earth do you think they will be happy paying you before you have provided any of the services they were looking for when they came to you?

The hourly fee rate set by most firms(if that is how one bills) allows for these sorts of unbillable hours (Well most do), so if one say works a 40 hour week one budgets for billing say 30 and sets one's hourly rate accordingly, to me charging one's hourly rate for this sort of activity is akin to double charging.

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By JD
11th Oct 2022 11:04

Will - As I have commented on your headlines/articles previously, can I say this well written, does not contain the tendency for overstated headlines, and raises an interesting question that is appropriate for this forum. Thank you.

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By Self-Employed and Happy
11th Oct 2022 11:07

No Fee.

If you are on boarding them it's likely because you are moving them onto YOUR preferred software, you get the client on the new software ASAP as then you charge them from that month onward.

If there are catch up accounts that is a completely separate chargeable task, when I onboard clients I'm doing it so that my future months are profitable per the quote, I tell them that we shall download all of the content from their old Cloud Accounting software, we then send it to them in a zip file (taking copies for anything we'd need), if they want to continue having a read only access subscription to the old stuff then they pay for it themselves, the new subscription is included in our monthly price.

We aren't the cheapest, we are usually referred due to our stupendous service, we feel not charging them to onboard to the software and the ways we want (because it's efficient for our practice) is a good fresh start to the relationship which is then followed but us teaching them exactly how we want them to do things.

This leads to an army of clients all doing the same thing / methods on the same software, all making the same mistakes which are easily sorted, it just makes sense, usually the first few months the clients ring / email a fair bit to make sure they are doing things correctly, then after a while I only speak to them once a month when they present their monthly purchase invoices / receipts.

This is also a good way of evaluating whether a client will be good long term, if they after 6/12 months are continually asking the same things through bone idleness then time to ship them on as they aren't efficient (not had many of them thankfully).

Clients want regularity, they want efficiency, they don't mind paying if they can see you are always on top of it all.

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By Hugo Fair
11th Oct 2022 11:19

Not really sure why this is seen as an issue ... either you recoup your costs or make a loss. The only question is how you present the charge - overtly or hidden within your other charges.

Note: "This style of pricing, however, is what best works for Toon’s firm, he argued, noting that his team doesn’t tend to have one off transactional clients in their space."
And that is the crux of the matter.
If you price per project (with no regard to retention) then you must include the cost in each project (whether shown separately or spread across your chargeable hours); whereas if you price annually (and invest in retention) then you can afford to discount (some of the) initial costs across say the first 3 years.

But all those aspects apply to *any* provider of services (and are probably more dependent on how you construct the rest of your pricing ... resources or results, and all other such old arguments).
The real question is simply whether you present the charge overtly or hidden within other charges.

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By tanyajackson
11th Oct 2022 11:46

We don't charge a fee for onboarding, however we do have a clause in our contracts stating that should the client go through our onboarding process but then decide not to use us (aunt [***] will do it instead), a administration charge is payable.
We try not to give up too much technical tax info in the initial consultation but you have to give something up to show you know what the hell you're talking about. Some newbies take these nuggets of info and feel they are informed enough to do it themselves (which is fine, power to them). However a small admin fee covers our time and costs should the client not stay.
So in my opinion, happy client that stays and no losses for us.

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By Justin Bryant
11th Oct 2022 11:50

Hugo Fair is obviously 100% right and I find this just as bizarre a question.

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By eppingaccountant
11th Oct 2022 12:16

I thought that Izzi Rosenberg was a female, not a "he". Please clarify. Thanks.

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By eppingaccountant
11th Oct 2022 12:17

I do not charge for Onboarding. But I charge a modest initial deposit to all new clients on the understanding that if after the Onboarding process they do not join, they waive their deposit. Never had an issue with this. I think this article is making an issue out of something that should not be an issue.

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Replying to eppingaccountant:
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By Hugo Fair
11th Oct 2022 12:26

Irrespective of gender, your question made me look up Rosenberg and Co via google ... where I discovered that they are Solicitors providing services exclusively related to one-off property deals (not Accountants providing recurring services).

So the whole premise of the article (two opposing viewpoints) is actually based on comparing apples vs pears!

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Replying to Hugo Fair:
friday dress
By srb01
11th Oct 2022 13:05

Hi Hugo,
Just a polite small side note correction
Izzi works at Harris Rosenberg, as a chartered accountant.
The editorial have mis-wrote the company name.

https://www.harrisrosenberg.co.uk/
https://www.linkedin.com/in/izzi-rosenberg/?originalSubdomain=uk

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Replying to srb01:
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By Hugo Fair
11th Oct 2022 13:35

Thanks.
Makes the opposing viewpoints in the article more interesting.
Might be worth having a word with Will, then, about correcting the company name within the main article?

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Replying to Hugo Fair:
me
By Will Cole
11th Oct 2022 16:02

Apologies folks, I have made the necessary edits to the article - thank you for the head's up!

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By patrickcb
11th Oct 2022 12:53

I do not charge by the hour, but work on fixed fees for all my clients irrespective of the type of work. Clients are becoming more used to set-up fees for things like cloud accounting, VAT and payroll, and they see this as a reasonable up-front fee. Some time ago I wrote an eBook for clients explaining the onboarding process and a far as I know new clients accept that onboarding involves a lot of work on my part (certainly more than the odd hour if it is done properly). At the moment I send them the eBook automatically when they sign the fee proposal, but I'm now I'm thinking this should be done at an earlier point in the new client process and that it should be charged for. As one of my mentors said to me many years ago, if you don't charge clients do not take it seriously. The point about a client would not do work without being paid for it. The days of the gentleman accountant have long passed - we are running businesses and clients should be charged!

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By Ian McTernan CTA
11th Oct 2022 13:19

Personally I don't charge a separate fee for onboarding. I aim to retain my clients forever, so quote a fixed fee for ongoing work, an additional fee if there are accounts just about due, and swallow the minor costs involved in onboarding. It helps that I have no staff costs to cover, and I'm never going to be working flat out (how would I get to play golf?).

One off type of work I will generally quote a ballpark figure which will include all my time, including onboarding costs.

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By Open all hours
11th Oct 2022 13:56

Certainly. A fee (fine) should be paid every time the wretched word ‘onboarding’ appears.

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Replying to Open all hours:
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By Matt1999
11th Oct 2022 15:04

Just what I'd been thinking while reading the article and comments. Awful word.

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By Carolynne
11th Oct 2022 14:23

I always highlight to a client that the onboarding process takes time and I personally visit them to sign them up too, that if they do not proceed with any work a fee of X is due to cover the time I spent during the onboarding process (wording included in the letter of engagement). If they stay, the charge is not levied. This covers me for those who fall by the wayside after spending hours setting things up for 'free.' It has only happened a couple of times though, since I started in 2004, where someone has not proceeded after sign up.

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paddle steamer
By DJKL
11th Oct 2022 14:43

Do we all perhaps use a differing meaning to the term, "onboarding", not that I would ever have used the term?

My comments were re taking on a client, fact finding, permanent file creation, ML work and engagement letter, for none of these would I expressly charge, in fact I would not even have recorded time against the particular client re these matters.

Some of the comments hint that setting up ledgers on accounting systems etc is part of the "onboarding" meaning, for that sort of exercise I would have recorded hours on a time system. Whether I would have actually charged them these hours or written them off would depend upon the sort of indicative cost I had initially mentioned to the client when he/she crossed my threshold.

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Replying to DJKL:
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By Carolynne
11th Oct 2022 15:55

I agree, my comment also during the 'client onboarding process' would class this as being re taking on a client, fact finding, permanent file creation, ML work and preparing the engagement letter and risk assessment.

This takes a few hours in particular I visit them onsite to sign everything up, and therefore have a fee listed within the letter of engagement, whereby only if they don't continue to let us start any work for them, would this be due to cover our set up costs.

They are not charged it and indeed only a couple of times have I needed to apply for the fee and they have apologised for not continuing and paid it, to cover my set up costs, as it was made clear at the start. I have never had anyone complain about it being in, as the majority know they are going to proceed anyway and therefore not have to pay it.

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By indomitable
11th Oct 2022 15:47

Personally I would not charge an "onboarding fee" or more correctly term it as an 'onboarding fee", as your fees should be enough to recuperate this upfront cost

We either charge a monthly fee or a deposit upfront and make sure they set up a Direct Debit

From a marketing point of view if you are trying to attract clients, this is pretty poor marketing, " "we'll charge you before we have done any work and to satisfy our own onboarding procedures & processes"

If any professional said this overtly to me I would be off!

It's all about the impression you give to the client. Very poor marketing

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Replying to indomitable:
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By patrickcb
11th Oct 2022 16:06

But when you start the conveyancing process with a solicitor you are often asked to make an up-front payment, so would you walk away from them as well?

Monthly fees these days are cut to the bone and we make more losses than profits on jobs, so yes, as long standing professionals, I think we can start charging - but now I call it a "Client Activation Programme". No mention of on boarding!!

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Replying to patrickcb:
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By Hugo Fair
11th Oct 2022 19:52

Better not introduce a de-luxe version for new clients who are cash rich but time poor ... they may not appreciate a Client Rapid Activation Programme! :=)

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By PChapman
11th Oct 2022 16:29

It depends

As others have said I generally include it as a sunk cost and there are different definitions of "onboarding"
If the client is complex I would charge an additional fee for the extra work involved in the AML processes etc.

If I'm transferring a clients systems to a new platform (my preferred or otherwise) then this has a seperate set up cost and I pass on the subs costs.

I think what's important is that we are clear about what is and is not charged for. An extra fee for onboarding that wasn't discussed will leave a bitter taste! wheras an onboarding fee that was disclosed up front will be accepted.

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Replying to PChapman:
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By patrickcb
11th Oct 2022 16:35

I would always discuss it upfront, explaining the work that has to be done and it's importance, then include it in the proposal as a one-off fee.

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By Mr J Andrews
12th Oct 2022 09:39

Funny ; I've only previously heard of onboarding in the realms of H.R. speak where new employees are integrated within the company.
If it comes to the vote , I'm with John Toon. The clock starts ticking when the client is On Board.

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By Winnie Wiggleroom
12th Oct 2022 12:23

The argument is pointless without first clarifying what each party means by onboarding.

For me, the term means taking on a new client, having a conversation, doing the initial LOE and AML etc, it could take longer for a larger client perhaps but honestly how long does it take with good processes and software, 20 minutes, half an hour? in which case whatever happened to an initial free consultation? No charge from me.

If on the other hand there is a substantial amount of "onboarding" onto new software for example that might be a different matter and is a service in its own right.

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Replying to Winnie Wiggleroom:
paddle steamer
By DJKL
12th Oct 2022 16:10

I concur.

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By MC1
26th Oct 2022 08:40

To those who do not charge an "onboarding fee"
1. Do you reduce your salary / dividends you take from the business by the amount of work you do on the onboarding process? So if you spend £200 of time onboarding a client in a month, do you take £200 less from the business that month?
2. If not, then are you not actually just including that work in the fee you charge clients for the ongoing work?
3. If so, would it be more open and honest to either charge or at least say that you don't charge because the cost of time spent is included in your ongoing fees?
4. Do you charge new clients a premium routine fee higher than existing client routine fees for the same ongoing routine work? If not, is there an argument that you should tell all existing clients that when you onboard new clients, all existing clients pay for that onboarding work inherently in their fees.

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