Client management can present a unique challenge for accountants. No amount of tax expertise can prepare you for navigating the complex realm of accountant-client relationships. While you might pride yourself on delivering excellent client service, you can’t always rely on clients to share the same level of engagement.
If a client’s commitment, expectations, or attitude fail to align with your own, your partnership might no longer be a good fit. Knowing when and how to sever those relationships is one of the most difficult yet important components of client management.
First, we’ll highlight negative client behavior that might make it worth reexamining some of your partnerships. Then, we’ll explore ways to repair fractured relationships and how to professionally dissolve those that are irreparable.
Client behavior to watch out for
Frequent late submissions and inaccurate documentation
Even reliable accounting firm clients aren’t immune to occasional errors. Late document submissions and missing tax information can be expected from time to time. But clients that consistently fail to provide timely and accurate documentation can delay preparation and magnify seasonal workload compression.
Scope creep
Scope creep occurs when a client attempts to request services that exceed the breadth of work initially agreed upon. You might be tempted to tolerate certain demands for the sake of providing quality service. However, doing so can create a slippery slope that results in larger workloads without added compensation.
Late payments
Maybe one of your accounting firm’s clients continually fails to pay their invoices within a reasonable time frame. This won’t necessarily be an easy habit for them to break. And constantly sending reminders might not be worth the headache for your firm.
Ethical concerns
Some taxpayers might seek out accounting services with the hope of skirting compliance measures. Providing advisement that seemingly supports a client’s unethical intentions could put your own reputation at risk in addition to theirs. Any liability questions and potential repercussions far outweigh the upside of maintaining this type of approach to client management.
Amicable differences
There doesn’t always have to be a point of contention to warrant letting a client go. Maybe your firm no longer has the bandwidth or specialty to meet their expectations. In these instances, it might be courteous to refer your client to another accounting firm that can better service them.
Ways to mend relationships with your accounting firm clients
Revise your engagement letter
Before confronting one of your clients about scope creep, make sure that none of your documentation could have created false expectations. Ensure that your engagement letter clearly defines the scope of work and leaves no room for interpretation. If your client genuinely misunderstood, it’s time to update your engagement letter with more precise language.
Streamline client collaboration
Your less engaged clients might be more responsive if they had a more convenient way to collaborate. A Chase survey found that 87% of respondents use their mobile banking app at least once per month. And 90% prefer to manage all their finances in one place.
The popularity of centralized mobile banking suggests that many accounting firm clients would prefer a similar mobile experience for their taxes. Updating your taxpayer collaboration process with cloud-based, mobile-friendly options is an easy business decision. A mobile app for uploading documents, e-signing, messaging, and making payments encourages faster response times.
Communicate your dissatisfaction
Sometimes a simple display of transparency can make all the difference. Politely but firmly asking a client to modify their actions may improve engagement. Be sure to explain how their behavior is negatively impacting your firm and how changing it can enable you to provide better service.
How to terminate a client relationship
What if these client management techniques don’t succeed and the accountant-client relationship is beyond repair? If unresponsiveness, unreasonable demands, payment issues, or some other type of violation persist, the next course of action would be to serve a termination letter.
The letter should clearly communicate that the relationship has come to an end and address the status of any in-progress engagements. Obligations to fulfill these services could vary based on state accountancy regulations, but you may want to complete them to avoid unnecessary risk.
The termination letter should also highlight outstanding fees, even though collecting payment might be unlikely. Attaching a final billing statement to the letter tends to help avoid confusion.
According to the American Institute of Certified Public Accountants (AICPA), including a reason for termination is not necessary, and in some cases, not recommended. If you’re looking for extra resources on the subject, the AICPA provides further guidance and a termination letter template.
How to start your client relationship off on the right track
Fortunately, the vast majority of your client relationships are unlikely to sour. Laying the groundwork for long, fruitful collaborations starts at the very beginning: your engagement letter.
Learn about creating effective engagement letters with the right details, structure, and tone by reading our blog post, Best practices for your firm’s tax engagement letter.
Read MoreDisclaimer: The information contained within this document is provided for informational purposes only and is not intended to and must not be taken as a substitute for obtaining accounting, tax, legal, or other professional advice from a tax professional (e.g., an Enrolled Agent, CPA, attorney, etc.). No warranty or representation, express or implied, is made by SurePrep, part of Thomson Reuters, nor does SurePrep, part of Thomson Reuters, accept any liability with respect to the information and data set forth herein. Distribution hereof does not constitute legal, tax, accounting, investment, or other professional advice. You should consult a professional advisor and/or legal counsel prior to acting on the information set forth herein.