As an accounting firm coach, consultant and mentor I interact with a lot of accounting firm owners and managers. One of the common themes during 2024 in most firms is that there is no shortage of work. In fact, it’s quite the opposite. Most firms I speak to say there is a significant pipeline of work that is just not getting done. That being the case, there has never been a better time for accounting firm owners and managers to critically review their client lists and ditch some. It’s pleasing to be hearing more conversations about this and action being taken.
So why would you do this and what clients do you choose? For most of you the answers to those questions are obvious but let’s spell them out. My experience has been that most firms have some clients they don’t like working with. They are often referred to as the “D“ clients. Some of the reasons they are D clients are that they are:
- Haggling all the time over fees
- Slow to pay
- Slow to respond to your queries – you always seem to be chasing them
- Disorganised (despite your best efforts)
- Difficult to deal with and/or rude to team members
- Reluctant to take your advice or follow through to do what they’d said they’d do
- Just not people you like (you didn’t know this when you took them on, but it is now clear that this is the case)
My very strong view is that life is too short to deal with clients like these. So just ditch them!
One of the fears accountants have often had about ditching clients is that the lost revenue won’t be easily replaced. That is an unfounded fear because chances are you have a pipeline of work you are not getting to. And most of that is probably with existing or new clients you want to work with.
So how do you get rid of a client? Some accountants say they tell such clients there will be a significant increase in price on the assumption that they will choose to go elsewhere. Feedback I get is that sometimes this doesn’t actually work as the client often accepts the new price! Now while that might mean you are getting more “danger money” for working with clients you don’t really want to work with, I put it to you that you are not being true to your values and a bad client is a bad client no matter what they pay. One risk you also take in trying to get rid of clients in this way is that you may tarnish your reputation in the sense that you get described as charging outrageous fees.
The way to get rid of a bad clients in my experience is to talk to them! The conversation might go something like this. “We’ve been working with you for X years now. Recently we did a review of our client base and as a result of that wanted to let you know that we don’t believe we are a good fit for you and you for us. The time has come for you to move on to another accountant. We thank you for your business and wish you well.”
The client may ask if you can suggest someone else and you answer might depend on how you feel about the client and other firms. I can imagine a situation where a client may be a bad fit in one firm but a good fit in another. If that is the case, and you can identify another firm that is appropriate then by all means do an introduction to that firm. It is then up to the now ex client and that firm to decide if there is a match.
On the other hand, if you don’t see the ex client as a potentially good fit in another firm you know then my advice is to say something like. “Unfortunately the other few firms I know have told me they don’t have capacity to take on new clients so I’d suggest you go to the Xero website and use the find an accountant tool to assist. Again, thank you for your business and best wishes.”.
What about if the client has not yet paid you in full? In that case I suggest you make sure you collect the cash before you ask the client to leave. If the amount has been outstanding for some time that is another sign that you are making the right decision to let them go.
One story to finish with. May years ago a firm I was in had a great example of the power of not keeping clients who are not a good fit. One of the partners asked his team if there were any clients they didn’t like working with. He was somewhat surprised to be given a list of about 12 clients with fees totalling $100k +. The partner asked for an explanation and was told that all of these clients treat him as the partner with respect but were horrible to them as team members. The partner checked the facts and was satisfied this was true, but something he had not picked up on. He ditched all 12 clients and there was “dancing in the streets” so to speak. The team were delighted and it was a wonderful example of sticking to your values. In a matter of months these fees were placed by new work with existing clients and some new clients. Please don’t be shy when it comes to ditching clients that are not a good fit. And why not follow the lead of the partner in my story and ask your team to identify any clients who should be considered for exit.
I have never heard a single accountant say they regretted ditching any clients and I’m confident it will be the same for you.