Allocating golden eggs into more than one basket
istock_siraanamwong

The accountant's guide to profiting from clients

by
3rd Sep 2018
Save content
Have you found this content useful? Use the button above to save it to your profile.

One of the most difficult decisions that anyone working in our profession faces is how to maximise the amount of net revenue that they generate from clients, without killing the golden goose.

A number of different approaches have been tried over the years and there is no perfect answer.

Some firms believe in maximising short-term profits. For example, they may sell tax schemes that are flavour of the month but might well eventually prove to be unacceptable to HMRC. In the short term, they will be able to charge very high fees but the clients involved are likely to disappear as soon as they realise that schemes were ill-conceived. Even worse, they may also seek to take legal action against the practice.

Increasing fees can have a similar consequence. Up to a certain point, clients will probably pay because they appreciate the service and, more significantly, cannot be bothered to go to the trouble of a long tender process. However, eventually they will be pushed over the edge and move on. Inevitably, this will happen immediately before some major piece of work would have fallen into your lap.

At the other end of the scale, we sometimes work far too hard to accommodate clients, reducing fees to a point where practices effectively losing money on the work as a means to retain the client. In the short term, this might be sensible in a market where it is difficult to bring in new clients who will be any more profitable. However, working for the benefit of a client rather than your own practice makes no sense at all.

A different approach is to look at the cost end of the equation. Moving compliance services to India has been a popular route in recent years but the general impression is that this has rarely been quite as easy and profitable as originally anticipated.

Changing methodologies to standardise procedures; for example, developing banks of letters to deal with specific low-level tax matters or reducing audit work can also cut costs and increase profitability.

Using a similar principle on a rather more grandiose scale, if you find a fantastic means of helping clients to save money, typically in the tax arena but possibly in other areas of the practice, cloning these for other clients can bring in substantial fees at relatively low cost.

Ultimately, perhaps the best way to really boost profits is to find clients who are rather bigger than the average. They will generally have a different approach to fees, which can be refreshing.

As an example, any company that has been dealing with the Big Four is likely to be used to paying through the nose for services that are solid but unexciting.

If your firm’s charge-out rates are 50% or even 75% lower, then if it can attract what many clients might regard as a relatively small project and do it well, they will be delighted at getting a bargain and you will be over the moon with the rare opportunity to achieve a 100% recovery rate.

This should lead to the dream scenario of a very happy client who has paid through the nose for your wonderful services and is desperate to come back for more. In the dream scenario, they might even tell their friends about your wonderful practice.

Replies (5)

Please login or register to join the discussion.

avatar
By Ian McTernan CTA
04th Sep 2018 10:23

Long term, stop looking at clients as objects, foster relationships, don't always charge for everything and you will be richly rewarded with loyal clients who bring you new clients without you doing any expensive marketing.

You can charge premium prices and they will happily pay and appreciate the value you bring.

Or use the 'squeeze every penny out of them' high churn rate practice that has a low reputation and has to market aggressively to gain new clients to replace those leaving.

Short term you can build a decent size practice doing this then offload it to some suckers and repeat the process a couple of years later- some in the contracting business have managed this quite well, treating clients as assets and giving faceless service.

Thanks (1)
7om
By Tom 7000
04th Sep 2018 11:44

Milk the cow don't kill it and eat steak
Works better in the long run

Thanks (1)
Replying to Tom 7000:
avatar
By grecianwebb
06th Sep 2018 14:06

Don't you need to kill the cow to eat the steak?

Thanks (0)
avatar
By SeaMountBizLtd
04th Sep 2018 11:47

Build relationships, if they trust you to be honest with them and to be timely with their accounts they will stick with you. Keeping clients informed of anything you think is relevant to them and their business will keep that trust going.

Thanks (1)
avatar
By AndrewV12
12th Sep 2018 12:06

You will amazed of how many Accountants are scared to charge, all most as amazed as how much some Accountants charge and get away with.

Some fees are poles apart for similar work, what does it come down to ....who knows.

Thanks (0)