Don’t be afraid to talk fees with your clients

By Roger Russell www.accountingtoday.com

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Most accountants are scared to death of talking about fees with their clients. But it is better to talk about fees early and often. Clients don’t like surprises, especially when it comes to fees. So the very first thing to do whith a new client is to talk about fees.

Even including an estimate of fees in an engagement letter is a good idea. It’s about training clients and setting expectations. When an estimate is given, make sure that the top end of the estimate is more than the conceived cost, so the actual bill will always come under the estimate. Then look at the estimate and figure out ways to reduce it.

Also don’t file the return until full payment is received.  All CPAs should do this. You wouldn’t leave a store without paying for groceries, and yet preparers say all the time that they’ll send a bill. Why do that?

Ironically, one of the biggest challenges for CPAs is accounts receivable. They don’t add value, and no one wants to go after them. If a retainer is taken up front and the rest before filing, accounts receivable is eliminated.

By charging upfront, two things are accomplished: Improved cash flow, and for clients, it breaks the fees into two payments so they don’t get a big bill with the return.

Another goal is to reduce client stress, by giving them no surprises of owing a big chunk of money when the return gets filed.

It’s all about training clients and setting expectations. When expectations are set early and it is made clear that we the best are being done to hold them down, it takes pressure off both the preparer and the clients.

If extra fees result in savings to the client they will be happy to pay them. But if work has been done, billing the client and then trying to collect on the bill without explaining the extra work, will completely change the dynamics and potentially upset the client.