Action for accountants when a client is looking for a reduction in fee

Clients need to feel they are getting good value

Negotiating a fee with a client is not a ‘zero-sum’ game. A successful negotiation will leave both sides feeling they have gained something from the process. Most clients are not interested in the detailed work accountants undertake on their behalf and place more value on the personal relationship they have with their accountant. A simple measure an accountant can take to create the capacity needed to support clients is to outsource routine tasks such as bookkeeping or accounts preparation. The client will not see any difference in the technical accuracy or timeliness of delivery of work but will see an improved, personal relationship with their accountant.

In this scenario, both the accountant and client obtain value from the negotiation. The client will see an improved level of service and the accountant can justify the fee level by providing more personal support and timely advice.

Ensure fees reflect the value of work to your team

The ongoing discussions with clients around fees and their expectations about service can be stressful and time consuming. Some accountants prefer to maintain engagements with clients where they make no margin at all rather than have the difficult conversation about adjusting fees.

When negotiating a fee, accountants need to emphasise the value individual tasks contribute to the overall client experience. While it may be tempting to offer certain services such as bookkeeping or payroll at a lower cost to a client, the individual delivering those services may feel undervalued and that their work is somehow less important than tasks delivered by other colleagues. By nature, individuals need to feel their work is important and valued appropriately. Accountants should therefore be cautious when offering reduced fees for specific accounting tasks.

From the client side, if a reduction in fee is secured, they may wonder what more could be achieved by way of reduced fees or free services. When negotiations occur in the future, clients may use this leverage as a matter of course.

Accountants who consistently undervalue services risk staff burnout, dissatisfaction, and lower profit margins over time. Whatever the fee negotiated, it needs to underpin the long-term sustainability of the business in terms of people and finances.

Promote the value added by accountants work

When clients are looking to negotiate a reduction in fees, accountants need to highlight the positive attributes they bring to help clients succeed including:

• Professional expertise and experience
• Quality and timeliness of work
• Positive customer experience
• Competitively priced services.

Compromise means keeping your most valued clients

A client may have a limited budget due to short term circumstances such as reduced demand for services or market forces. Accountants are often reluctant to lose a client regardless of the length of time the relationship has been in place. A compromise can usually be reached to agree changes in payment terms to monthly or quarterly or even a reduced level of service, such as reduced personal contact or longer turnaround times for work.

By listening to a client and taking appropriate action, accountants will help build goodwill and loyalty for many years.

Consider new ways of delivering services for a reduced fee

While accountants look to set fees to deliver reasonable margins, many fail to review the way services are delivered to achieve the same objective. The automation of tasks and embedding of cloud-based software provide scope for changing the way services are delivered. Outsourcing services to an offshore provider can improve service delivery using the latest technologies.

In terms of the services an accountant may outsource, the work does not need to be confined to transactional areas such as bookkeeping or payroll. The outsourced accountant can support the onboarding of clients and provide continuous feedback on the services a client might need, such as tax or specialist advice. The outsourced accountant can help Practices look forward and assist with the real-time reporting needs of clients, adding value to the work of the onshore accountant. Outsourcing work helps accountants provide professional support and expert advice their clients need without increasing the permanent establishment of the Practice.

Accountants could also look at incentivising clients to undertake some tasks themselves and remove them completely from the scope of work. Advances in cloud accounting software, mean many clients are comfortable maintaining their own accounting records, requiring the support of an accountant only at key points in the accounting period.

Relying on clients to prepare basic accounting records can lead to peaks and backlogs of work at key points in the year when VAT returns need to be filed, or year-end accounts prepared. However, outsourcing such tasks can create the additional capacity for more direct contact which adds value to the client relationship.