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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?

12th Oct 2020
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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.

Clear communication

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!

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Replies (11)

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By practice for sale
13th Oct 2020 10:48

I provided vast quantities of information (sometimes even daily newsletters), answered queries, was the proverbial shoulder to cry on, all for free.

But I charged for all the CJRS claims that I prepared and submitted for my clients. My rationale was simply that there was an identifiable financial benefit to the client for that piece of work and that alone made it chargeable work. And indeed I set my expectations up front "This is what needs to be done, here is what I will charge you, let me have the info if you want me to do it".

No one even raised the proverbial eyebrow, there was not a single query.

So I guess my definition of the 'line' between freebie and chargeable is that as soon as a piece of work provides a specific identifiable financial benefit or outcome, it crosses that line. I'm adamant that I will continue to charge on that basis as the pandemic hardens over the winter.

Probably.

Possibly.

Thanks (3)
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By AndrewV12
13th Oct 2020 11:30

Bloody good article, clients are a nightmare, they all have a problem in them, which they hope you will …resolve for nothing.

I do not charge for everything I should, I see it as if I employed a builder to build me a large extension, would i expect him to throw in a new build garage for nothing, off course not so why do our clients expect things done for nothing (okay a bit of an extreme example).

In my experience, I take a view if your clients are not grumbling about fees your probably doing it on the low side.

Also where do accountants that charge around £200 for a set off accounts go when a client has a query / problem, there is no slack in £200, I expect they say the first thing that comes into their head, no slack for technical reading. .

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By HLB
13th Oct 2020 11:01

Good question. Why do accountants do things for free? My dentist certainly doesn't. Due to COVID prices have gone up to cover PPE and the fact that not as many patients can be seen and there is now a £28 charge to every patient for 'COVID cleaning' the surgery after each use. The difference is that he is upfront with his pricing structure whereas many accountants are not. And don't forget that dentists are in the service sector and rely on referrals and goodwill too.

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By Ian McTernan CTA
13th Oct 2020 12:00

As the majority of my clients are on fixed fees, this hasn't been so much of a problem for me, as I tell them there is additional work involved and we will review the fee at the appropriate time.

I have built in to most of my fees head space so that 'additional' work does not become an automatic cost to me.

If you are charging by the hour then even if you have not charged extra for the additional work so far, make sure you advise clients of how much extra time you have spent on them so they are aware- even go so far as to render bills showing the value and the deduction, and letting them know you are helping them now by not charging but they can expect an increase next year.

If you can't absorb the cost then send a bill or advise that you will be sending one out for this month's furlough work, etc.

Thanks (3)
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By Michael B Bennett
13th Oct 2020 12:02

The key problem of freebies is that if you are not putting any financial value on the work, then the client does not. As a generality, I do not do things free of charge, but have, in the past, cancelled a bill under extreme circumstances, such as a client having to cease work while fighting brain cancer. The client survived and has since paid every fee invoice by return. But where there is an on-going need for services, there should be a charge; if you are able to be generous and reduce the charge to more of a token, I know that all of my clients would understand and appreciate.

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By KH
13th Oct 2020 14:53

I do freebies only if I have sufficient leeway in my invoice for such largesse, or when the client really is one of those rare persons of honesty and integrity .... like the woman who didn't have the money to pay my bill one year, but then repaid the outstanding amount in full (along with the money for the current year's invoice) as soon as she could after I'd done her next set of accounts ... I didn't even have to remind her that any money was outstanding (I had, in fact, already written it off).
Whereas other clients are billed my "standard" fee for the year's work, or get a detailed invoice which states clearly the extra work I am billing for. Yes, some do get work done for free, but they do have to be really nice clients, clients I wish to hang onto, or ones I feel need a bit of hand-holding till they are back on their feet again ... the PITA type clients were all discarded long ago.

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By [email protected]
13th Oct 2020 16:05

We've all had to upskill for the CJRS - with no long term benefit and the clients have received a tangible cash benefit. Why wouldn't you charge? You've been diverted from other chargeable work to deal with claims.
Just remember that most clients wouldn't think twice about claiming on your PII policy if you've made a mistake.
If you've not even charged for the work in the first place and end up with an excess payment and increased premiums as a result of a successful claim then that really does rub salt into the wounds!

Thanks (4)
Replying to [email protected]:
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By AndrewV12
14th Oct 2020 08:38

Just idle curiosity, has any one out been sued by a client? or know of anyone who has been sued.

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Replying to AndrewV12:
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By HLB
14th Oct 2020 09:51

No and it really makes me wonder why my PII went up by 600% this year. Grenfell Tower was one of the excuses given why the market has hardened. What that has to do with Accountants I can only wonder.

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Replying to AndrewV12:
Chris M
By mr. mischief
14th Oct 2020 10:35

I had a PII claim and complaint once which the client threatened to sue over. An enquiry into her September 2014 VAT return had gone badly. Sadly for her, I had resigned as her accountant in April 2014.

One of the issues leading to me resigning was all the personal stuff she wanted to claim VAT on but I was not claiming VAT on it. I have a strong suspicion about what led to her VAT enquiry.

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Replying to mr. mischief:
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By AndrewV12
15th Oct 2020 09:44

Well done for resigning, it so easy to get dragged into clients, Vat, payroll, accounting ............ nonsense.

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