Question time
4 Aug 08
Mark Lloydbottom asks whether your firm's time is well spent in terms of client service - in meetings or on run-of-the-mill work in the office
by Mark Lloydbottom
These are challenging times for accounting firm owners and their clients. The accounting marketplace is more competitive than ever, and the economic climate accentuates the challenges clients need to address. But every challenge is also an opportunity.
Accounting firm owners who have faced a difficult economy before will be able to inform those who have not about the impact of tough times on clients and the firm. More than ever, business owners need advice, wisdom and encouragement to survive and prosper.
Over the past ten years, I have probably asked more than a thousand accountants: “How long do you spend with an ‘average’ client in a year?” The answer is usually between 90 and 150 minutes.
However, most of that is spent dealing with compliance, with little time directed towards advice on planning and problem issues.
I recall a study some years ago that measured the attributes of client service from the point of view of the practitioner and the client.
The practitioner considered the key attributes of client service to be technical whereas the client was more concerned with matters such as timeliness, responsiveness, relevant advice and availability.
It is clear from this study that clients take the technical competency of the accountant for granted and place a higher value on how they are treated and the advice they are given.
It is also clear that the accountant could do more to understand the clients’ needs and expectations and endeavour to meet them.
Here is a selection of challenges and strategies designed to highlight enhancing client service.
Measuring client service
When did you last survey your clients to find out how satisfied they are?
It is better to survey continually rather than periodically. Options include involving your receptionist in asking clients to complete a survey while they are waiting or including a survey with the accounts or the tax return letters – remember to include a reply-paid envelope.
They include:
1. Finding out at the time when clients are not happy – follow up to address their concerns
2. Identifying the additional service needs now – can you meet these needs?
3. Discovering where clients think the firm could improve – what action should you take?
4. Giving clients an opportunity to refer – remember to thank them.
Key Question: Decide how you will solicit feedback from clients, then implement.
Billing issues
In the next ten seconds answer this question: “How many products or services have I bought in the last six months without knowing the cost?”
The answer may well be none or only a few. Most suppliers display the cost of their service or product, or give one on request.
We all focus on the cost of a transaction and yet clients often do not know the cost of our service until they receive the invoice.
An increasing number of firms agree fees in advance of the service provision. In this case the accountant is assuming the risk, whereas time billing generally means that the client assumes the risk. The time-billing system might be tried and understood, but in truth it leans towards rewarding inefficiency.
Am I advocating “value-billing”? No, but every bill is looked at by the client on the basis of the value, so a value-billing approach is a good reference point when raising any bill.
Key actions to improve billing procedures
1. Bill clients promptly while the “tears of appreciation are moist in their eyes”. If your work in progress (WIP) exceeds 10 per cent of your annual fees, there is an ever-increasing time gap between the client’s delight in the service they receive and the payment for it.
If your WIP exceeds that level, complete the work and bill it. Billing promptly avoids your WIP further depreciating. As a general rule, WIP depreciates 2 per cent for every month it remains unbilled.
2. Agree the fee in advance.
3. Have managers do the billing.
4. Use fixed pricing.
Use a meeting agenda
Does the client really know what will be discussed at the next meeting? Give clients a written agenda beforehand, to manage the client’s expectations regarding the scope of the meeting.
As shown in the extract, below, a meeting can cover matters that relate to compliance work while providing an opportunity to discuss other matters. Start your meeting by asking the client whether they wish to add to or omit anything from the agenda. Client meetings should be two-way communications.
The agenda lets you discuss current and future matters, all of which are usually of more importance to the client than compliance alone.
The Internet has redefined people’s expectations of timeliness, whether it is the delivery of a product or a reply to an email. Order a meal in a restaurant – how do you feel if you are kept waiting more than 20 minutes?
Speedy response is now the norm. But research in accountancy offices reveals that it takes an average of seven to nine weeks to complete accounts that take only days or a week of work.
Depending on your average hourly charge rate, a fee of £2,000 might involve 30 to 40 hours work, of which, say, 80 per cent is related to the accounts production. That is four to five days’ work. Why then take eight to nine weeks to complete it?
Key Question: Do you know your firm’s performance? What will it take to speed it up?
What does your accountant do for you?
I have imagined myself asking this question of clients and expect that the resounding answer would be: “Reduce my tax.” A speech by Winston Churchill at Harrow School in 1941 contained the memorable words: “Never, never, never give in.” We should “never, never, never forget it’s all about tax minimisation”. Clients pay us to ensure they do not pay one penny more tax than necessary.
Key actions
1. Involve your client in the tax minimisation process. Let them know what you have included in the deductions and ask: “Is there any other cost or expense that has not been recorded or that we should include in your accounts?”
2. Remind clients that you have done all you can to reduce their tax to the smallest amount possible.
Brainpower enhances client service
Clients’ interest in compliance is probably only transient. They momentarily leave their responsibilities and plans to attend to their compliance responsibilities.
What do you have to offer? What have you learned in the past year to make yourself more valuable to clients? Take a client you have served for six years: are you still offering fresh wisdom, ideas and insights? Clients expect us to handle their affairs competently and professionally, but what about the extras?
Key Question: What can you study to bring more engine power to the table? Management, marketing, strategic planning, IT, HR, succession planning, turnaround and so on?
And finally
The outcome of enhancing client service should be happier clients who will pay bills more promptly, recommend you with enthusiasm to their contacts and ask you to perform additional work. Clients will be less likely to leave but will become Clients 4Life.
To buy a copy of Clients4Life visit the ICAS book store online here