All aboard! Onboarding fees continue to split opinion
Are views changing around charging onboarding fees to prospective clients? A recent AccountingWEB webinar suggests that they might.
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Having had a couple of time wasters recently, I am more inclined to charge in order to cement the idea that they have committed to something. Then, if the business fails in the first few months or they decide that they want to go somewhere else after all, we have been paid for what we have done so far.
I will give them a free initial meeting still but I will charge at least something for all the form filling etc. After all, we wouldn't hesitate to charge for all the admin at the other end of their company's life cycle.
I actually notice an increase in the "will there be a charge for that" as though they expect it.
When we ran our commercial property estate agency, when a new client came along say asking us to lease a property for them we charged a setup fee of £350.
When we let their property at say £20,000 pa our fee would generally be 10% of this , so £2,000, but the £350 already charged would be reduced from this charge, so fee note of £1,650 plus outlays (Boards/platforms etc)
I can see the need to bill up front with all the tyre kickers in the world, but not convinced ,if they do become a client that is later billed, that this should be an additional charge.
I agree that set up or onboarding fees make good commercial sense and we accept them in other aspects of our lives. One argument against such fees in the past was that accountants absorb them as evidence of their willingness to invest in a relationship that will hopefully go on for years.
One approach I like is when the set up fee is quoted and charged and then offset against fees (on the face of invoices) over the first two or three year. Thus, as long as the client stays with the accountant they do not bear the cost of the set up fee. NB: Accountant's fees are quoted upfront with an annual uplift so that there is no big rise in fees paid after the offset ends.
It's okay for accountants to take a log view and "absorb them as evidence of their willingness to invest in a relationship", but.........
what if the client doesn't follow that 'investment in the relationship' and disappears before the set-up work is absorbed.
It's also a question of the overall fee. If the work / fee is not that large then it can be more of can the fee for the work be absorbed into the set-up fee.
It can still take as long to set-up a client with a £500 annual fee as a £10,000 annual fee.
I'm more inclined to charge a set-up fee for the small reoccurring work e.g. of £250 to cover ML ID, Engment letters, Due diligence etc
One approach I like is when the set up fee is quoted and charged and then offset against fees (on the face of invoices) over the first two or three year. Thus, as long as the client stays with the accountant they do not bear the cost of the set up fee.
I've used this approach for setup in the past. Doesn't cost the clients that stay on any more but gets you a fee from those that flake out.
I have a setup fee as part of my pricing menu. The amount depends on the services they want us to provide. It usually has to be paid up front. I always explain how and why we charge what we do and I've never had a problem with this. It gets charged once they agree to appoint us and covers the initial and quite considerable time involved in the setup admin.