Fee or no fee: Accountants draw the line on free work
With the pandemic accelerating an economic crisis, financial fear is hitting businesses hard. As the dilemma of the spring bleeds into the winter months, where do you draw the line with what qualifies as paid work?
Firms spent the beginning of the pandemic offering support beyond billable hours and many continued this good will by processing furlough claims free of charge. With the near-constant accessibility of practising accountants, it can be difficult to determine where the work stops and the fees begin.
But as the Chancellor rolls out an expanded Job Support Scheme (JSS), AccountingWEB readers have learned their lesson from the first round of furlough, and are determined not to repeat the spring free-for-all.
An anonymous reader reacted to the JSS announcement by telling clients that they’re now going to charge fees for processing the claims, where they’d held off charging under the original CJRS. “I’ve had arguments with two clients and lost one just over that,” said the reader.
Other readers have come to the same conclusion. “I get charged for absolutely everything by everyone else, so why should I be different?” said AccountingWEB reader Slim.
Pressure on the profession
“Accountants are really bad at setting expectations with their clients,” commented Heather Townsend, founder of the Accountants Millionaires’ Club and co-writer of Profitable Pricing for Accountants. “It often means they do a huge amount for free that they should have been paid for.”
Townsend agreed that the pandemic has accelerated this issue. “Clients have always traditionally pleaded ‘I can’t really afford that’,” she said. “There is an element that clients are looking to get the maximum amount of service out of what they’re paying.”
The effects of Covid-19 have left struggling businesses strapped for cash; there is considerable pressure on the industry to take care of their clients in order for their practices to survive.
“There are times when I think I am operating as a charity,” AWEB reader Paul Crowley quipped.
Many had been left unsure earlier this year about whether they should charge clients for furlough claims. “Most of them cannot pay their salary bill this month so I would not for one second have considered adding to their burden,” said AWEB reader NH back in April.
However, reader Marky begged to differ, asking if all their effort was even appreciated: “Do clients really expect us to perform all this work free of charge? What is clearly noticeable is the lack of clients asking if we are charging for all this free work.”
“People want the work fairy to appear,” said Townsend. “They do a lot of stuff for free in the hope that will mean the client appreciates it and says thank you for it in turn,” in the form of client referrals and customer loyalty.
“Very often we train clients into the fact that we’ll do it for free - they just have to ask,” she added.
To fee or not to fee
Indeed, this is not an issue unique to the virus. “I’m guilty of doing work for free,” confessed AccountingWEB reader Slim. “A random tax question, a mortgage cert, an extra employee on the payroll, furlough…”
No one wants to be one of those accountants that charges for a quick call, but these extras add up when you’re operating on such a large scale.
The AccountingWEB community rallied around Slim with advice. “How much of your time do you estimate these ‘freebies’ take up?” asked AWEB reader Anonymous. “If it's on average, say, 10% then can you effectively price that 10% into your fees?”
Another reader, The_drookit_dug, advised building a buffer into all fee quotes - “an hour or two for phone calls throughout the year”.
However, Lucy Cohen, the co-founder of Mazuma, took a more hard line approach in a recent AccountingWEB Live episode: “Don’t do it. Never do it - no freebies.”
People don’t value what they don’t pay for - “if you need a service, you pay for it,” Cohen commented. An increasing number of practices are scaling their pricing to fixed fees in an effort to alleviate this confusion.
But defining the point where brief queries turn into more loaded jobs requires great diligence and a billing agreement prior to the proceedings, which can be easier said than done.
Even if you know where to draw the line, actually having that conversation with clients can be difficult. “People are uncomfortable with saying ‘there’s a charge for that’,” explained Townsend.
The client-centric culture of the profession is part of the problem: “It’s not said specifically but there’s that underlying ‘we’ve just got to say yes to the client’,” she added.
Navigating that discussion can be exhausting: “They know I don’t make the rules, but they’re disappointed I’m not more ‘flexible’ in applying them,” said an anonymous AccountingWEB reader regarding Sunak’s recent Job Support Scheme.
There is also a disconnect between what the team is collectively saying. Townsend advised setting the parameters prior to speaking with your client: “People haven’t sat down with the team and asked ‘what is part of our normal service?’” she said, “so they’re often not charging enough for the level of service they give.”
Importance of self-value
Ultimately, the hesitancy surrounding proper payment boils down to a lack of confidence. “When you’re feeling down, the last thing you want to do is reach out to a client and say ‘by the way, there’s a payment for that’,” said Townsend.
When you start to undervalue yourself and your services, that’s when drawing the line becomes harder - it builds the illusion that you have to give away more to keep clients on board.
In the spirit of celebrating value, don’t forget to enter the Accounting Excellence Covid Hero Awards!