How do you define what a good client for an accountant is? What personal qualities would they have, what type of business would they run, how much (or little) work would they create for you and your team, and how demanding would they be of your time?
Your definition of what a good client is will differ from all other accountants but it’s fair to say that you’ll already have clients you prefer dealing with and other clients who, when they want to speak with you, send an unnerving shiver down your spine.
Client personality aside, a good client is most likely to be the one whose demands of you match your practice’s capacity and ability to deliver.
Perhaps I have been binging on my “Wall Street” Blu Ray too much recently but Sun Tze, the Chinese general, military strategist, writer and philosopher, believes that the idea of knowing who you were was of paramount importance to achieving your goals.
He said that you should “know others and know thyself and you will not be endangered by innumerable battles”.
Historians and scholars have attributed various interpretations to this phrase over the century but the interpretation I personally prefer is that you’ll never be prepared for danger if you don’t know your own strengths and weaknesses.
For the purposes of this article, I’m going to transpose that “danger” as meaning an inability to effectively service your clients in either the way they wanted and/or the way that you promised you’d look after them.
Your practice’s strengths and weaknesses
The only person in this world you can be truly responsible for is yourself.
Likewise, the only person responsible for your practice’s strengths and weaknesses is you – the owner of that practice.
It was your decision and your decision alone which range of services you offered to your clients and the way you described your level of service to clients when you pitched them for business.
Likewise, it was your decision and your decision only to choose which staff (and how many) you would employ to support you and the software with which you run your practice.
When you first met your current clients before you signed them up, how “hard” did you sell your practice and its abilities?
Probably very hard – you wanted the business after all. And I am willing to bet that not a word which passes your lips you didn’t completely believe in.
At the face-to-face meeting, was there a question your future client asked you which you didn’t say “yes, we can do that” to?
But were you describing the services and the level of attention as your practice was then or as you wanted it to be at a future point in its development?
Particularly in newer practices, there is a dash for growth as owners seek to maximise capacity and generate the cash required to build a team around the owner.
In many cases, this means that practices, whether new or old, often have too many clients on their books meaning that their ability to deliver the level and quality of services they had promised at sign-up is severely impaired.
The point I am making is that all of the decisions you have taken to date have created something of value and of worth – that is, your business – your practice.
However some of these decisions will have left you underprepared for “danger”.
The real life consequences of accounting “danger”
For an accountancy practice, “danger” can mean three things:
- you become distant from your clients,
- the quality of your work suffers, and
- you make your professional life and your staff’s professional lives almost unbearable.
First, “danger” might mean that you’re not in touch with your clients as often as you would like or they would like. Survey after survey has shown that clients are more likely to leave for another accountant if they feel ignored or neglected.
With up to 36% of clients looking to switch at any one time, the “danger” to your business is that more than a third of its revenues may disappear over the coming year which you’ll need to replace.
Second, “danger” might mean that you’re working past your practice’s capacity limit – you have too much work on for you and your team to cope with.
The problem here is that you and your team then adopt a survival posture – doing work only when it needs to be done and in a hurry. One example of this might be logging into your client’s Xero account six weeks before the CT600 is due and before accounts must be filed at Companies House.
This creates almighty scrambles for you and your team to improve often inadequate financial records to HMRC’s barest minimum quality level meaning that many opportunities to save clients money on their taxes are missed because of misclassifications of expenditure items.
Last, the third major consequence of operating in survival mode is on your and your team. You’ll be exhausted – account, file, repeat, account, file, repeat – and probably desperately unhappy.
The staff working for accounting firms in general (not specifically at yours) are among the most unhappy employees in the general workforce and, in many cases, it would not take much to persuade some staff to jump ship to another firm in the hope that they’ll find something better, less stressful, and more varied.
If any of this sounds familiar or you could envisage it happening, there will be no such thing as a “good client” or a “bad client” anymore.
There’ll only be “unmanageable clients” and “completely unmanageable clients”.
To find and keep good clients, you need to know thyself
For a client to be “good” and for you to be a good accountant to your client, there has to be a fit.
I’m excepting personality from this discussion – if you’re in a face to face meeting with a potential client and their personality makes your skin crawl for whatever reason or they laugh too hard at their own “jokes” too many times during the conversation, be the bigger person, shake their hands, and walk away from the deal.
Earlier in this article, I mentioned how you and you alone were responsible for your accounting firm’s capacity and its range of services.
If you are finding that you have too many “bad clients”, I humbly suggest that what makes them bad is that they are giving you too much work to do:
- for what they pay you and/or
- your and your colleague’s ability to juggle that additional work with your general workload.
There is clearly a bad fit here – it’s not working for you and it’s not working for them.
What’s to blame? In many accounting practices, it’s often the lack of an efficient working routine.
Instead of preparing period ends, year ends, and Self Assessments with six or less weeks to go before the deadline, can you reorganise your practice to split the work over the course of a year?
For example, if there are five of you servicing 200 accounts, you could task your colleagues to log into each client’s Xero accounts once a month to check for certain issues like:
- cash in the bank,
- level of indebtedness,
- average days taken to pay an invoice,
- when the last invoice was issued, and
- when the last bank reconciliation took place and how many outstanding items need reconciling.
Each time your colleagues checks into your client’s accounts, task them to run a series of reports. The results of those reports will indicate how much individual attention each client needs to ensure that their financial recordkeeping is up to the required standard.
When issues are spotted, encourage your colleagues to call the client, explain the nature of the problem, and offer a solution.
If those solutions are ignored month after month, put the client on warning that, if they do not keep their financial records up to date:
- your ability to save them as much money as possible on tax will be compromised and
- you’ll be closing their account at year end, period end, or at the end of the contract they’ve signed to access your service.
By doing this, the amount of remedial work you and your colleagues will need to do when preparing their accounts or readying their submissions to HMRC or Companies House will be minimal.
If you have five colleagues and your firm serves 200 clients, this means that each colleague will need to log into 10 clients’ accounts every day to run reports. In the early days, this will take up a fair amount of time but, as your clients start to follow your instructions, that workload should decrease month on month.
Your regular communications, if occasionally nagging in tone, will be appreciated by your clients because it actually seems like you’re paying attention to them. You’ll be a “good accountant” to them.
Their acquiescence to your colleagues’ demands to keep their books up to date will reduce the overall volume of work required per client as well as spread that work out over the course of 12 months. They’re now much closer to being a “good client” for you and your team.
The benefits of introducing a more defined and regular structure to your and your colleague’s workloads and to minimum standards of interaction from a client are many.
Instead of being chased by clients for their accounts or to find out their level of tax liabilities, you’ll be able to let them know within weeks giving them time to find the cash – that benefits both of you.
You’ll break the cycle of “account, file, repeat, account, file, repeat” for yourself and your colleagues. There’ll be less general pressure when they come into work and at peak times of year.
And for you and your colleagues, there’ll be much more time to offer a wider range of services to your clients – work which will bring in extra revenue to the practice and work to provide new stimulation and engagement to your staff.
The Hindsight app
I personally know all of that which I described above – that was my old accounting practice once before I sold up.
Since selling up, my new team and I have spent 18 months developing the Hindsight plug-in for Xero.
Why “Hindsight” and not “Foresight”? It’s because the way I would have run my old accounting practice, with hindsight, is how I’ve set out in this article. Client-focused, colleague-focused, and focused on delivering the type of practice I would like to have run.
The processes I’ve described have been coded into Hindsight but, instead of your colleagues personally logging into 200 different client accounts once a month, Hindsight does it automatically every day, runs the insights on your behalf, and then assigns different tasks and/or clients to different members of your team.
If I’d had Hindsight back then, I don’t think I would ever have sold up because the app is capable of delivering what I wanted for my practice. And, after speaking with hundreds of colleagues before and during its development, I know many of you feel the same way.
I’d really appreciate the opportunity to show you around the system.