| 1 Get the fee right! | | | | increases dramatically. |
| The number one factor determining recovery | | | | 5 Make sure the job is well planned |
| rates is the fee. In a straw poll done by us over | | | | A well planned job generally will improve recovery |
| 100 firms we asked "How much would you | | | | rates dramatically. The rough rule of thumb is that |
| charge for a set of limited company accounts, | | | | about 20% of the job should be spent on |
| corporate tax return and a personal tax return | | | | planning, 65% on doing and 15% on finishing off. If |
| for the sole Director?" The accounting records of | | | | the planning percentage is put too low then the |
| the company are in Quickbooks, the analysis is | | | | recovery rate reduces. Put in practical terms, if |
| good and the bank reconciliation takes about 3 | | | | you just tell the staff "the client is ready, go and |
| hours as most of the time the Director puts in | | | | finish the audit" but don' t tell how not to |
| the bank statements himself and balances the | | | | over-audit you are asking for trouble. Software |
| figures. Tax returns are basic. | | | | can help. The new electronic audit software takes |
| The fees charged varied by over 250% | | | | [in the slightly tongue in cheek words of one |
| depending on both the location but mainly on the | | | | consultant] copying last year's audit file to new |
| attitude of the partner to charging fees. The | | | | heights. You need to think through the process to |
| lowest was £750 and the highest £2,500. | | | | make sure it is done well. This takes planning. |
| Presumably they all had broadly similar cost bases. | | | | 6 Keep the right level of staff on the job |
| 2 Weed clients | | | | This takes careful work planning to make sure |
| Some clients just won't pay you the correct fee | | | | that the clients who are bringing their work in are |
| and the time spent in fee disputes is not worth | | | | those who fit the staff available. It is best to plan |
| the aggravation that will inevitably follow increasing | | | | in all clients and warn them if they bring their |
| the fee. The guidance is that we should weed | | | | books and records in late the price goes up. |
| 10% of our client base every year. In year one | | | | 7 Consider outsourcing |
| this makes very little difference but over a five | | | | Certain sorts of work lend themselves to |
| year period you can dramatically change the way | | | | outsourcing particularly well. This is particularly true |
| you do business. | | | | of computerised records with a high analysis or |
| Weeding clients only works if you have good | | | | reconciliation work content. Likewise payroll can be |
| quality new clients coming in at the top end. This | | | | outsourced very effectively. |
| is why marketing and selling is important even if | | | | 8 Train your staff well |
| you are "busy". | | | | Many firms try and avoid training saying it costs a |
| Remember someone else's good clients may also | | | | lot of money. Generally not training staff costs |
| be your bad clients - so they are eminently | | | | even more money - think of how time consuming |
| sellable. | | | | first year trainees are! |
| 3 Ask good clients for referrals | | | | 9 Set budgets for jobs |
| People deal with people who are like them. If you | | | | If you do not tell staff how long you expect a |
| ask your best client for a referral then they are | | | | job to take then unsurprisingly the work expands |
| likely to send people who appreciate what you do. | | | | to fill the time available. Ideally the staff should |
| Similarly your most fee resistant clients are likely | | | | agree the budget before starting as then they |
| to refer you only because you are cheap. | | | | buy into the process. |
| 4 Have an idea of the elasticity of demand for | | | | 10 Don't link the budget to the fee |
| your services | | | | I remember saying to a partner once "the reason |
| If you increase your prices by ten per cent what | | | | my recovery rates are so low is because your |
| percentage of your clients will you lose. The | | | | chargeout rates are too high and your fees too |
| answer for most firms is almost none. From our | | | | low" [I had a short career at the firm - even |
| experience the demand for accountants' services | | | | though my comment was largely correct.] The |
| is inelastic for two reasons. First clients deal with | | | | length of time a job takes to do is nothing to do |
| you because they trust you and it takes time to | | | | with the fee on a job otherwise our pro bono |
| build up that trust. Second the size of the fee is | | | | work would not take any time at all. Using |
| often just not large enough for them to worry | | | | budgets is a way of controlling costs not setting |
| about. Our caveat to this is that there is a "glass | | | | fees - fees should be based on the value to client |
| ceiling" above which the client drop off rate | | | | and what others are charging. |