The Cost of a Client's Mistake - The Book-keepers Forum (UK)

David Rosario · Veteran Member

The Cost of a Client's Mistake

Shamus · Forum Moderator & Expert

Hi David,

I don't understand the question.

Things like reputation cost can be difficult to quantify.

For fines, penalties and surcharges it's a matter of how long os a piece of string.

For actual misapplication of accounting standards resulting in poorer return than would otherwise have been achieved is impossible to quantify in general terms.

I think that as asked the question isn't actually possible to answer. You may wish to rephrase to a more specific one.

kind regards,

Shaun.

kjmcculloch83 · Expert

The biggest cost can be their business itself. Let me explain, I find that most clients have an obsession with profit, when will they make a profit, how much profit did they make. Not many realise that profit isn't as important as their cash flow. Cash is king (and I know I preach to the converted here) so why dont the clients realise. After all run out of money, and you run out of time regardless of how profitable they are.

I'm interested David, you ask these questions a lot, are we compiling a FAQ for you? Why so abstract and what are you doing with the answers? just interested.

Kris

David Rosario · Veteran Member

Hi Kris,

Thank you for your input.

First and foremost, questions lead to answers irrespective if they are right or wrong. The outcome I seek to gain is the opinions and answers from my fellow members who from their past experience can relate to the question.

I believe in "knowledge is power" and by asking you guys the questions that cross my mind I can develop my career as a professional bookkeeper to a better standard for the sake of attracting potential clients and by attaining my present ones.

This is why I ask these questions.

Kind regards

David

David Rosario · Veteran Member

Hi Shaun,

Thank you for your input.

What I am asking is "What can be the cost to a client's buiness from their mistakes of not hiring a professional bookkeeper beforehand?"

Kind regards

David

ADAS · Guru

Hi David,

Hugely variable I would imagine. It depends totally on the nature of the mistake made e.g from adding up manual books incorrectly or paying a supplier twice, to messing up the vat leading to unnecessary penalties and interest.

hth

gbm · Guru

Huge!

Coincidentally, my blog going out Thursday this week is more or less about this subject, will post when it is issued.

gbm · Guru

http://www.gbmaccounts.co.uk/the-journal/a-lesson-in-how-not-to-run-a-company

kjmcculloch83 · Expert

Nice blog Nick

ADAS · Guru

A great read Nick, love the Red Adair quote.

gbm · Guru

Thank you - don't want to preach too much, as I think all of you know it anyway, but having a company means being responsible. The worst cases relate to pure ignorance and simply focusing on saving tax (or worse still, fraud).

Stardoe · Guru

Excellent blog Nick....I might use that Red Adair quote on my invoices....lol

Pauline

Shamus · Forum Moderator & Expert

Truly great blog Nick and nice one for trying to get an upfront payment from the client.

A chartered freind of mine recently got shafted on fee's for a similar situation. In her case she got them out of trouble and then they chose to fold the company leaving her high and dry on getting paid for the many hours of work that she had put into getting them back off HMRC's naughty chair.

The real problem now of course is that there are many businesses that don't have money at the moment but would if they were able to go through an equity reconstruction. My freinds not going to be putting herself out for them now without upfront payment so others will suffer as a result of the actions of this one that really acted terribly.

when she was chatting to me about it I did mention that although we as financial professionals work to a moral and ethical code clients don't.

There is no set of ethical principles that a director has to adhere to, just the rules set down by standards and regulations (and as we all know, rules are there to be circumvented where principles are somewhat less flexible to interpretation).

To go over old ground, I've said it before and I'll say it again. I don't think that anyone should be allowed to be a director of a limited company without some form of financial training and membership of a professional body.

I know that many schools now offer business studies and accountancy on their curriculums. Which should at least be a start for the next generation... If only the teachers had a clue what they were talking about!

Then again, don't think that thoughts of financially educated directors will ever go anywhere. They'll just be rejected by the government the same as the campaign to get the title of accountant protected in law... If we can't even get that what hope do we have for directors adequate to face the challenges of running a company.

Sorry, got carried away... I'll just step slowly away from the soap box and retire back to my paperwork...

Talk later... Oh, and great Red Adhair quote too.

All the best,

Shaun.