Need help in Fixed price monthly fee... - The Book-keepers Forum (UK)

Amanda · Expert

Need help in Fixed price monthly fee...

kjmcculloch · Guru

Hi Amanda,

Glad to hear the letters are working for you.

Regarding the fixed fee for this particular new client, I would generally base mine on a combination of the number of transactions and turnover. The turnover in this case is fairly low, and if his wife pays the suppliers that's great too.

What is he looking for from you? Will you be providing a simple monthly management report or anything more indepth? Is he a sole trader? If he is, can you do his self assessment and save the need for an accountant?

Regarding simply subcontracting the work to the accountant, I can understand where you are coming from but this will depend somewhat on your professional body. My understanding is with the ICB you cannot subcontract work for which you are not qualified to carry out as you are still ultimately responsible.

If he had around 40 transactions a month he would, on the surface of it, probably fit into my lowest category of £45 per month, if he had slightly more he may pay up to £60 but I can't see it being any more than that. The time required for this will be minimal, I would have thought for someone of this scale an hour or so a month would suffice.

I look forward to reading the views of others.

Kris

Amanda · Expert

Thanks for the quick repsonse Kris,

He first started telling me that his wife took care of his paperwork, and then he told me its in a carrier bag!!! So I guess maybe she thinks that paying the suppliers etc and leaving the rest in a carrier bag is 'doing the books'. The impression I get was that he probably has kept every receipt but they are probably not logged anywhere, I have spoken to his wife and she didn't mention that they were on spreedsheets or anything, even when I spoke about putting it on a computerised system she didn't say that any of it was on spreedsheets or even written in a book etc. To be honest if I offered any type of reports he would probably say whats that etc, hes a sole trader, I don't think hes interested in any reporting etc. Unfortunately I can't do his Self assessment, I do my own, but thats it. Also I am only part-qual AAT so probably wouldn't be covered etc.

thanks,
A

kjmcculloch · Guru

My strategy in this case would be to give him a figure to bring him up to date. He obviously now realises he can't go on the way he is.

Then tell him you're going to help him cut his bookkeeping bill in half, and save him loads on his accountants fee at the end of the year, but he needs to do a couple of simple things to help himself. Give him 2 box files and tell him to put all the receipts for things he buys in one, and sales invoices in another.

Tell him when his wife pays an invoice to get her to write the date and how she paid it at the top. and when he gets a payment to do the same for the sales invoice.

All my clients now do this as second nature, it saves me time and them money and it's really easy. Most people just want a system.

I give all my clients at least a simple set of accounts each month with at very least a Profit and Loss Account and Balance Sheet. At the beginning in their 'welcome pack' I give them a booklet on understanding their accounts, the difference between making a profit and having money in the bank, and how they can have one and not necessarily the other. I see part of my role to educate them on how to at least understand the basic figures they need to know about their business. Many may not read it, or understand it, but they can never say you didn't tell them.

Kris

Amanda · Expert

I have a client who when he gives me his pile of paperwork every month he has put when they are paid on it (usually prints the on-line banking sheet to say its pd), always writes on his invoice the date that he received the payment and even how ie bacs etc. I must admit it makes it alot easier to follow.

I will see what state hes in next week, although you never know he might be OK (wishful thinking), I will then suggest the box files that a good idea at least it will make it simplier for him.

I know its difficult to say but if its a years worth and like I say hes not large what sort of figure would you be looking at? I'm just not sure how to judge it especially as hes a new start up with no previous bookkeeper to have a look at what they charged him.

Many thanks again.

Amanda

-- Edited by Amanda on Thursday 23rd of September 2010 04:01:23 PM

kjmcculloch · Guru

It's really difficult to work out. But say he does 3 jobs a week, and has on average 15 purchases per month. That's just shy of 350 transactions in the year, though it may be less as he's a new start.

So it may take a couple of hours to sort them and on average a processing time of 1 minute per transaction to input the details depending on the software you use. That's just under 5 hours. Then the processing of mileage, which he may not even have a record of. Then use of his home etc, another few hours. There's maybe 2 days work.

This is where the price, for me, really depends on whether he will be very much a one off client, or you want to cultivate him to become a regular. For a regular I would be looking at around £300-£400 for this, that's still £20 - £30 per hour for you.

If you can, print his reports, have it bound, get a good quality cover. It'll cost you a fiver tops, but he'll love it. He'll be impressed with it. I can't get my head around this, but it works.

Then I'd tell him that next year I'll help him get more organised and if he works with me we'll get that down to £50 a quarter. I know I said before I wasn't in favour of quarterly bookkeeping, but for this size of business it makes slightly more sense.

If you want it to be a one off client, go for £500-600 as at this stage he's probably beginning to realise what leaving it means. He'll realise that the deadline for a SA is looming, he'll know there's a fine heading his way. He'll probably be worrying about it a lot now.

Kris

Amanda · Expert

Many thanks for the info, I'll see what mess hes in next week and go from there.

I use QB's most of the time and occasionally Sage instants. What software do you use most of all?

Do you do a journal for use of home as office or do you leave that one to the accountants to add on with the adjustments at the end?

Do you base your monthly price when you first visit the customer, on how many transactions you think they may have in a month etc? I'm definately going to go down the fixed price route from now on.

I never understand new start ups that haven't even phoned an accountant, I'm sure they think it will cost them dearly so they don't bother and like you say with the SA looming they now could be in trouble! It just amazes me.

Many thanks,
A

kjmcculloch · Guru

I use VT the majority of the time. I find it quick and easy to process multiple transactions.

I generally do a journal entry for using the home as an office. None of the accountants my clients use have said anything so far about it, I never gave it a huge amount of thought that I may be stepping on toes.

I really do a quick calculation in my head on their turnover, transactions, the value I'll add to their business and how much they can realistically afford to pay me, theres no point pricing your self out of their range for something that will ultimately make you quite a bit over the long term, small businesses grow and then there's an opportunity to revisit pricing on an annual basis. But equally I wouldn't go in too cheap, people are more suspicious of lower prices than they are of higher in my limited experience.

I think people get scared when accountants are mentioned, they think it'll be really expensive. They get into a hole where they've done nothing, or even worse have done something and are scared of being told they've messed up so try to ignore it an bury their heads. I think that we, as bookkeepers, can sometimes take the edge off that.

Kris

RobH · Expert

I have a few landscape gardeners of this size and I do their accounts once a year and include their tax return. The bookkeeping they supply would be fairly minimal, perhaps a simplex D book maintained or a list of customers and purchases. To be honest any further bookkeeping takes no more than 3 hours I would say and then to finalise the accounts would take no more than an hour or two. For the whole job I would probably charge between £200 to £300. You have to be thinking for a guy who has a turnover of less than £25k and possibly a profit of around £15k then he is not going to want to pay £600 for his bookkeeping. Imay be wide of the mark but I think if you mentioned anywhere near £40-£50 per month then the client will baulk, well he would if he lived in prosperous Coventry! The thing is, the guy isn't vat registered and theres probably no pressing need for monthly management accounts. i'm guessing he has read your letter and thought, I can save money off my accountancy bill, however if he is being charged say £400 for his accounts then he won't want to be paying anything like that. It might be worth asking to see a copy of his accounts, that way you can see what his accountant has charged.
I think this is the kind of job you would either do once a year for whatever you charge out for a day or quarterly either on a lowish fixed rate (£25 to £40 per quarter) or on an hourly rate. I would save my fixed fees for the slightly larger or vat registered clients.

Just my thoughts and of course I would love to be proved wrong as I might start doubling my charges!

Rob

kjmcculloch · Guru

The problem with getting a feel for what his accountant charged him, Rob, is as Amanda said, this is his first year, he's left it to the last minute, has stuck all the invoices in a bag/box and forgotten about it.

I think the point isn't that its £40-£50 a month, it's not. What I was suggesting is £300-£400 for the year, then showing him how by getting it done regularly he can save himself a bit of cash. I think what I was saying is £50 a quarter rather than a month.

To be honest I would say at £25 per quarter it wouldn't be worth switching the computer on for me.

Kris

-- Edited by kjmcculloch on Friday 24th of September 2010 02:22:11 PM

Amanda · Expert

HI Rob,
THanks for the info, I was thinking along the lines of quarterly as from what he says hes small at the mo, although seemed abit clueless on the phone if you know what I mean!

He hasn't got an acountant yet, he just hasn't got a clue.

I know what you mean about being put off about the price, I told him I couldn't quote him over the phone and its best to have alook at his stuff first.

You haven't been on here much lately Robb, you must be really busy! Did you get your staffing problems sorted out in the end? From memory didn't you employ an older lady who wanted to play tennis instead?

thanks
Amanda

RobH · Expert

Sorry I didn't pick up on this bein his first year. I think if you can squeeze £50 per quarter like Kris is suggesting then it would be a good fee. Though I think I would be more likely to charge him annually £100. I bet this could be knocked into shape within 3 hours. Maybe have a word with one of your accountnt connections and ask them what they would charge if you did the books. If they say to the client, normally it would be £400 plus but since the books are done so well it will be £200 then he would be happy. I have a couple of bookkeepers who sub the final accounts and tax return to me. I tend to lower my price purely to make them look good.

I'm massively busy at the moment Amanda and it will not let up until we see the back of January now! You have a good memory about that older lady. I have since gone to the other extreme and taken on an apprentice AAT girl. I've always said no in the past as I feel they would benefit motre from a larger firm but I had been getting so many letters and emails and phone calls that I decided to go this route. The apprentices only get on the course if they are employed. She has day release but has fitted in well and is bright, so I seem to be on to a winner!

Rob

Amanda · Expert

Hi Rob,

Sounds like you are onto a winner, its always good to have reliable staff, when I have worked in an office in the past you always get one or two that have odd sick days and it throws the office out no end, I always think if your not ill enough to be in bed then you can go to work!!! Glad to here you are really busy. Do you advertise at all?

I will go down the quarterly route with this one, it it happens, rang yesterday to arrange a meeting with the wife and she was out, so she was meant to call back last night but never did. I think some people just get really scared when you mention their books and then bury their head in the sand. So I will phone again on Monday if I've not heard from them.

I'm not as busy as I would like to be, lost a client recently to the recession etc, hes gone back to doing it himself as hes not very busy. And in fairness to him he did QB and his accountant taught him and he was very good at it, it was just that he didn't have time to do it, but now they are really quiet hes doing it again.

Thanks for the info,
Amanda

-- Edited by Amanda on Saturday 25th of September 2010 10:14:19 AM

Amanda · Expert

Hi Kris,

I haven't used VT yet but am thinking about it. I use QB most of the time and once you get use to it it is user freindly unlike SAGE. What put me off SAGE was the price! although I was trained on Sage a long time ago.

Out of interest, when you do your follow up calls what type of response do you get from the people, are they pleased that you phoned, or rude, do you have difficulty getting hold of them especially if a mobile and you have to leave a message?

I'm keeping a spreadsheet of all the businesses I have sent letters to and what the comments will be when I start phoning back.

Do you find it demoralising if you get alot of knockbacks?

Sorry for all the questions

Thanks,
Amanda

Dalbir · Senior Member

Hi Amanda

"Do you find it demoralising if you get allot of knockbacks?"

Depends

I personally take knockbacks in my stride if I have work in the pipeline or an accountant or bookkeeper has signed up to use our system prior to the knockback.

If no work in pipeline or keep on calling but cant get past the secretary or answer phone, then yes can be demoralising if you let it. a nice long walk and a chin wag with a mate over a pint sorts that out.

Dalbir

kjmcculloch · Guru

Hi Amanda,

I generally follow my letters up with a phone call on a Wednesday or Thursday at least 7 days after I send them, but not more than about 10. This makes sure that when I start talking it's still fresh in the persons mind.

Knock backs are always hard, but I really just push myself to keep going. I think a lot of it depends how you are feeling before you start how you take the no's. But I suppose you just need to keep going because for me no clients means no food (ok it's not that drastic, yet)

If I am phoning a mobile I always tell them in a sentence what it's about and ask them if its a good time. Don't let them just say no, get them to tell you what would be a better time and make sure you call back then. I haven't really had anyone rude yet, must just be luck.

I manage my marketing using a piece of software I came across recently. It's called Amphis Customer. It's just a really easy to use package for me, I can keep track of who I send letters to, when I need to follow up, what we talk about, any estimates I give them etc.

You can download it free for a trial period if you fancy a look.

Amanda · Expert

HI Chris,

I've not heard of that software before, so will have a look.

When I use to do cold calling for a job, I had a few coldish people on the phone, but you soon get used to it and you have to carry on. So hopefully it'll be OK.

Dalbir - in my last job, their was a company and I couldn't get past the secretary, so I use to wait uintil she went on her lunchbreak and then phone, it worked everytime.

Many thanks,
Amanda

Amanda · Expert

Hi Everyone,

Updated on Perspective new client!

After all that last week and it sounded really promising, he was just a time waster, rang him a few times to try and arrange a meeting with his wife, and today he pretended to be the brother of the person I was calling. What a waste of time!!!!!

I shan't be bothering with him, if hes like that on the phone I would never be paid for the job I expect!!!!

Cheers,
A

BC Boy · Veteran Member

Hi,
Sorry to hijack the post but.... Kris in one of your replies you mention your welcome pack that contains a leaflet about basic understanding of the figures. Could you tell me where you get this from or is it one of your own design.
Thanks
Lewis

kjmcculloch · Guru

Lewis,

This is something I put together for my clients. It's just a pack of all the information they need in a concise format. Includes things like my terms, a bit about money laundering regs and the need to confirm their identity, a bit about how they can best organise their paperwork to save money, a guide to reading basic financial statements etc,

Kris

BC Boy · Veteran Member

Thanks Kris, didn't think that I had come across a pre-printed understanding financial statements pamphlet but though worth asking. Appreciate the response!

Amanda · Expert

Hi Kris,

When you phone round after sending out your letters do you end up leaving mesages on answer phones? The only reason for asking is I have been doing some phone arounds yesterday morning and this morning and have been getting alot of answer machines, I have left messages although not sure how effected this is going to be????

Just wondered if you get this alot? No luck so far with the avertising but you never know just when its going to happen!

Cheers
Amanda

kjmcculloch · Guru

Hi Amanda,

Sorry to hear you've not had much luck yet, it's just one of these things you need to keep tweaking and plodding away at.

I wouldn't really leave a message on voicemail, I'd just make a note of when I called and add it to my list to keep trying. I can sometimes call people 5, 6, 7 or more times before I speak to them. The reason I don't leave a message is that if the letter hasn't generated a response I feel that a 20 second voicemail isn't likely to.

Good Luck!

Kris

Amanda · Expert

Hi Chris,

thanks for the reply, I see what you mean about the message, I will have a go tomorrow and see what happens! I have made a note of all the businesses and accountants I have sent letters to and I updated my list a couple of times a week.
Have you also sent letters to accountants as well as small businesses?

Do you find alot of people do their own? Epsecially established businesses maybe they have someone who goes in say one day a week?

Many thanks,
Amanda

kjmcculloch · Guru

I've not contacted any accountants as yet. It is something I have thought about, but I haven't done anything about it as yet. Are you finding it's working for you?

I find many of the newer businesses are doing their own, the people who have started this year and have told me they do their own I am planning to recontact in in April/May when they are thinking about self assessment and realise that their box of receipts won't cut it.

Some have an uncle/sister/dad who do their accounts and the same will apply. I am now looking at Arithmo to see if it's something I can offer to those who want to do their own bookkeeping.

Kris

Amanda · Expert

I have had a couple that do it themselves but liek you said, they may soon realise thats its not always an option.

I have written to a few accountants and only rang one up so far, she was interested and although she has nothing at the moment she said she will keep my details for future reference, she did sound promising, I have also got 3 other accountants that I know through clients and I keep in contact with them regulary to see if anything comes up, as yet it hasn't but I suppose you just never know. I suppose its just networking at the end of the day and building relationships.

Cheers
Amanda