Chatting with an accountant recently he told me he was amazed why so many clients leave their tax returns to the last minute.  He told me he chases clients throughout the year. He sends reminders and prompts. He has recently asked around his business networks to clarify why small business owners and investors do this. It became clear that there are typically 3 reasons:

• They find the collation of their papers boring
• They have more important things to do
• It’s not a priority until the filing deadline is looming

My friend was frustrated by these replies but also satisfied. It’s not just his clients and it’s nothing to do with him.  All accountants struggle to cope with the January tax return rush but at least now he knows why.

WHAT ROT!

There is only one reason for the January tax return rush and, I’m sorry to say but it is entirely the accountant’s own fault. I’ve been saying this in talks for years and offering solutions on how to overcome the issue.

Quite simply your clients leave things to the last minute because you let them do so.  Yes you do. And, yes, YOU could change things. There are three main ways to do this:

1. Reference an earlier deadline and stop drawing your clients’ attention to the 31 January filing deadline. YOUR deadline is (say) 31 October. Treat it seriously and be as forceful around YOUR deadline as you have previously been re HMRC’s deadline.
2. Establish a stepped fee structure whereby clients have to pay higher fees the later they produce the information to enable you to complete their tax returns. And stick to it.

What do you think the third option is?

Related posts:

• “January was hell – and it was my own fault”
• Easyjet pricing by accountants
• Don’t just increase your fees, vary them

How do you handle clients who only want to pay less than your normal rates?

Seth Godin is renowned for his pithy and thought provoking blog posts and books.  His most recent post is a new (to me) way of looking at the age-old ‘time vs value based’ billing argument:

“Long work is what the lawyer who bills 14 hours a day filling in forms does.

Hard work is what the insightful litigator does when she synthesizes four disparate ideas and comes up with an argument that wins the case–in less than five minutes.

Long work has a storied history. Farmers, hunters, factory workers… Always there was long work required to succeed. For generations, there was a huge benefit that came to those with the stamina and fortitude to do long work.

Hard work is frightening. We shy away from hard work because inherent in hard work is risk. Hard work is hard because you might fail. You can’t fail at long work, you merely show up. You fail at hard work when you don’t make an emotional connection, or when you don’t solve the problem or when you hesitate.

I think it’s worth noting that long work often sets the stage for hard work. If you show up enough and practice enough and learn enough, it’s more likely you will find yourself in a position to do hard work.

It seems, though that no matter how much long work you do, you won’t produce the benefits of hard work unless you are willing to leap.”

You may not record 14 hour billable days. But if you focus on how much billable time you can record on your timesheet each day you are of the same mindset.

I would suggest that Hard work, in this context, is the application of knowledge, skills and experience to solve problems and to provide valuable advice – without the need for detailed research or long advisory letters. I would stress though that it should be genuine and not guess-work or risky half baked ideas that would have benefitted from proper research.

Hard work requires discussion over the value to the client. It also means the adviser has to decide whether the agreed fee will provide sufficient reward. Sufficient to cover not just the time but also to contribute to the build up of knowledge skills and experience which put the adviser in a position to provide the advice. Thinking that all through, having the discussions and accepting the outcome is Hard work.  But it can pay very well as a result.

Do you focus on Long work or do you have a way to get paid a fair fee for doing the Hard work?

I loved a recent blog post written by Paul Simister on his ‘Differentiate your business‘ blog.

He explains that Yellow Pages Bingo is a game for checking that your marketing hasn’t fallen into the trap of being too similar to your competitors. And he then reveals the results of playing the game with accountants in central Birmingham.

Paul’s game shows the high level of similarity when comparing accountants’ adverts in Yellow Pages. He looks at descriptions of firms, services and offers. I suspect the results would be the same across the country and that the content of accountants’ websites are also pretty similar.

Paul’s concludes by answering his own question:

What happens when every supplier looks the same?

The choice comes to either the cheapest or the most convenient.

I agree, but I’m not sure it’s a bad thing as it’s what most people want and those are pretty much the two most important factors determining how they will choose their first accountant. Cost and convenience.

Paul notes that the latest edition of his Yellow Pages has fewer adverts for accountants than previously. I suspect this is due to an awareness that most people now use the  web to find a new accountant. Back in 2009 I wrote a related piece:  Accountants’ adverts are not working any more

And here’s the rub. To be found on the web when someone searches for a new accountant you need to use the same words as everyone else – in so far as visitors may be searching for those terms.  Of course you have the facility to make your website stand out in other ways, beyond the words you use. But that’s a subject for another day although I have previously provided objective advice here on ‘websites for accountants‘.

What do you think about yellow pages bingo for accountants?

I wonder how many readers of this blog had heard of Elaine Clark before I awarded her the ‘best overnight budget summary‘ last week?

Elaine qualified as a chartered accountant in 1988 and now and runs one of the fastest growing online accountancy practices in the UK. She established it in 2007 and has a number of associates operating their own practices under the same brand name. Indeed Elaine offers a mentoring service for those who want to establish their own practice and benefit from the leads that come from web searches and her related online engagement.

I must admit that I was initially doubtful about the name of her practice: Cheap Accounting, although I do accept that it’s very attractive for online searches. After all, no one googles to find an expensive accountant do they?!

I was always taught that ‘cheap’ went with ‘nasty’. That we should not encourage clients to choose their accountant solely by reference to price – and that a focus on being cheap encourages them to do so.  And then there is the theory that although most clients want accountancy services provided (1) fast, (2) accurate and (3) cheap – they have to choose  just 2 of the 3 .

Having discussed this with Elaine I must admit to being wrong.  I now understand Elaine’s passion and her business model. Her practice offers ‘cheap’ accounting services in that they keep costs down and run an efficient and focused service. They can do this through a reliance on computer-based book-keeping packages and other technology that allows them to operate in a very cost-effective manner.  As explained on her website: “Quality is in no way compromised. CheapAccounting operates to a set of very high service values”.

Inevitably, perhaps, most of Elaine’s clients have straight forward accountancy and taxation needs. Needs that her experienced network of CheapAccounting.co.uk accountants are well capable of addressing. However from time to time there may be a more complex tax issue which requires more specialist advice.

I am delighted to announce that Elaine has chosen my Tax Advice Network to provide tax support when required. We have agreed a working alliance which is clearly promoted on her website.

For obvious reasons I do  not give permission for just anyone to include our logo on their website. Indeed Elaine is the first person to have that authority – beyond the tax adviser members of the Network of course.

I hope that readers are sufficiently intrigued to want to check out the Cheap Accounting website. It’s very different to most accountants’ websites. It’s also popular and successful at drawing in the sort of business that Elaine is targeting. Oh, and it even tells visitors how easy it is to change their accountant. I think we could all learn something from her approach.  Let me know what you think….

Let me be clear I’m not saying that everyone should or can do this. Simply that some accountants do it.

I was prompted to write this blog post after engaging with a couple of accountants on twitter. Here are their tweets:

Standing order mandates delivered to the bank. Get the customers paying in advance on fixed fee quotes. That’s the way to do it!

I do the standing order over ten months. They get January and February off. Then we negotiate next year’s fee. People like it.

Any extra work has the fee agreed in advance. Tax planning and tax credits on a value basis adjusted to actual when HMRC agree.

I think the two month post-Christmas payment holiday is a winner. Works for Council Tax!

@James_Hellyer

Every one of my clients pay monthly fixed fees in advance. Nobody ever complains. It should be the norm. It is with Broome.

It helps that we provide a Very Good Service!! backed with money-back guarantee

@BroomeAffinity

During some of my talks I often raise the concept of ‘fixed fees’ as one way in which accountants can reduce the time they spend on the billing process, improve their cashflow and reduce arguments about fees. Those who are implacably against the idea seem to feel that they HAVE to charge clients by reference to their timesheets.

Look. If that works for you, by all means continue. But do recognise that more and more accountants are winning new clients who want to pay a fixed fee for their annual service.  That’s irrelevant of course if your clients are happy, you’re happy and you’re winning new work that pays the fees you feel are fair for the work you’re doing.  The thing is that many accountants, who operate in what we might call ‘the traditional way’, cannot honestly answer ‘yes’ to all 3 of those questions.  What about you?

An accountant I was chatting with recently made this astonishing admission. I have to admit I was surprised by his honesty and self awareness.

Most accountants blame their clients for ignoring requests to produce their papers in good time to avoid a last minute rush before the 31 January filing deadline for personal tax returns. My friend acknowledged that with him it’s as much a question of priorities. Even if clients do supply their papers in good time he focuses his attention on meeting earlier deadline such as 31 December for 31 March company accounts and, before that, 30 September for 31 December company accounts.  I’ll bet his personal tax return clients wouldn’t want to hear this.

He told me that he incentivises clients to provide all their papers before the end of October each year. He doesn’t always have time to check that the papers are complete and sometimes has to ask for missing details when completing their returns in December and January.

I suspect that my friend is not alone. What do you think and what lessons can we draw from this situation?

(I will be addressing practical solutions to this situation on Thursday 24th Feb when I am speaking at a half day seminar: The holy grail: increased profits, with less work and without fancy schemes or massive changes. Full details here)

We’ve all had them. The client who sends a detailed letter/email listing a load of issues and problems.  Sadly I can recall having the odd one or two such missives when I was in practice.

I remember the feeling of indignation. The frustration at the unfairness of the accusations. The unreasonableness of the assertions and the one-sided nature of the complaint which totally ignored anyone’s perspective other than that of the client.

Yes, I know. The client is always right. Except they’re not. Sometimes they’re wrong, mistaken or liars.

I recall one occasion over ten years ago when I received a detailed list of issues from a client in response to the invoice issued by my tax manager. I went through the list and made a few notes. I gave these and the client’s letter to the tax manager to comment on. We crafted a point by point response. We were satisfied we had addressed all the points thoroughly and fairly. We sent our letter. This had the inevitable consequence.

We got another letter. With the benefit of hindsight I suspect the client was playing with us and playing for time. I don’t remember if there was another exchange of letters or not, but I do recall a meeting where we went through things line by line again.  Eventually the fee was paid and the final amount was not much different to the original bill.

I had made a fundamental mistake in replying to the complaint letter point by point.

What I should have done was to pick up the phone, apologise for any misunderstandings and ask what the client wanted. And then deliver that or discuss it in order to reach a fair result as quickly as possible.

Few clients WANT a line by line, point by point response to their letter of complain. Your detailed reply simply invites another round of the same game. Perhaps the client is simply trying to buy some time before they will pay you in full, maybe they just want a small reduction in the fee or a change in the personnel dealing with their affairs. Maybe they want a big reduction in the fee. Maybe they are going to be so unreasonable that YOU should decide you don’t want them as a client any more.

Far better to reach one or other of those outcomes asap and get paid what you’re going to get paid asap. Don’t you agree?

Related posts:

7 steps to resolving client complaints

The Tax Advice Network includes a private forum area where the tax adviser members can discuss and share ideas and issues. No one else can see or take part. A recent discussion concerned how different tax advisers deal with calls that only take 10 or 15 minutes.  A number of different views were expressed. My contribution was to refer back to a blog I posted last August: “I hope they’ll tell someone about me”

Of all the contributions from advisers who promote their services through the Tax Advice Network, this one seemed to be the most commercial. What do you think?

I am set up to bill small pieces of advice and  regular clients use me as an ad hoc advisory service for both large and small matters so I have no problem in charging for small bits of work. I see no benefit in giving free advice to professionals who phone up a stranger expecting something for nothing because that mindset probably repeats itself and they move on to the next mug. I am surprised that accountants would seek to do this because they, like us, are selling their time and expertise!

As an expert who only does one off work I stay well away from the notion of  a free initial consultation because there’s often nothing more to come anyway.  I have a different view of private individuals who are a riskier issue altogether and I am not surprised with the something for nothing chancers here. I tend not to advise at all without a formal engagement. There is little chance of any repeat work from this source but if bits of advice are given too freely and misused or misunderstood can we get sued and do we always have the full story anyway? I am very cautious with this in mind where I do not know the client.

Finally, why would we want to give our expertise away free? Even small bits of advice are often the product of years of experience and may save large amounts of tax. Surely this is worth something and I am reminded of a discussion at a partners meeting many years ago as to how to value the bit of advice that takes 15 minutes and save £1m. Do you charge 15 minutes or say £10,000+ (OK - it was a big 4 firm) for the umpteen years of training and experience that enables that answer to be given quickly?

It seems to me that if it is good advice then its worth paying for and if it’s good advice at a reasonable price then there should be a potential of good repeat work afterwards.

This is a follow up from one of last week’s blog posts. Here I’m looking more at the extra time and effort involved in complying with the new iXBRL efiling obligations.

Clients will only agree to paying additional fees if they perceive that additional work is being done and that this benefits them in some way.

Tagging company accounts for the taxman, using iXBRL tags, is going to be obligatory from 2011.

It seems that plenty of accountants have yet to determine exactly what they will be doing to ensure that their clients’ accounts are  compliant. I’m not sure how late you can realistically leave it before you find out what is going to be involved here. You’ll want to do this both to ensure that you are able to comply with the new obligations AND to manage your clients’ expectations.

Most importantly is the need, from a commercial perspective, to ensure that you only devote extra time and effort to tagging each client company’s accounts etc if you are sure you will be paid for doing so.  Asking for additional fees only after the event is unlikely to be very remunerative! Is it ever?