I need some advice on how to manage client relationships.
I started my practice in January and the hardest part for me is understanding how to set up operationally, what to charge etc. I have a medium sized client who after a lot of consideration I decided to charge a monthly fixed fee (I have brought her books up to date from July, so knew how much work to expect). The way I like to work is to input all of the data and then email her with a list of queries. What I would like to receive back is an email of answers, so that I have good audit trail. What I actually receive back is scruffy handwritten notes that I can barely read!
However, what my client asks for each time is a lenghty meeting over a leisurely cup of coffee to go through the queries. She has even asked me if I can show her how SAGE works! I didn't expect this and was just expecting a monthly drop off/pick up of files etc.
I am interested to learn how you manage your client relationships and whether you have regular face to face meetings and whether you charge for this time.
I had a similar situaltion with a client. I work on fixed fees too, and he tried to push the boundaries. I felt I had to stop him in his tracks becuase if I added one thing extra in without charging I know it would lead to more. I just gave him a quote for the extra work and he was fine with that.
I try to make sure when I come across problems like this that I revise my letter of engagement. I am also very clear about trasaction limits.
With meeting clients, I tend to do this with most clients at least once a month. I like to pick up paperwork and drop things off. It gives me an excuse for a chat, to find out how things are going etc. I've also got a few new clients through it. While you're chatting they sometimes remember things like "Bill up the roads getting in a mess doing his books." It also lets me pick up on potential problems or changes to their circumatances before they happen. One client I visited recently told me he was planning to open another shop in the spring, it lets me plan my workload better.
Above all, because I now work alone I don't get they chats over the water cooler, and I sometimes long for a chat.
If someone asked me how sage worked, I think I'd directing them to a training provider. I'm not a teacher.
I'd happily agree to all the meetings, and casually drop in there that of course you would need to charge for your time up front, but you're sure having to meeting to go through her queries and teaching her Sage would be no problem at all. When is a good time to discuss the new standing order fee?
All said as if it was the most casual thing in the world.
What I expect will happen is that she will suddenly find she wants to do it herself - in which case, keep good records of the time you spend, and be careful/specific up front about what is included in your fixed fee and what is extra (meetings for queries over 30 mins for example.)
She sounds like a good profit stream if gently she realises help means paying and paying means cheaper in long run.
When I decided on the fixed fee, I'd allowed for a monthly drop off/pick up and a 30 min discussion re the accounts, any queries etc. I'd expected to do the rest via email. What she is expecting is at least a 2 hour chat. The last time she booked a meeting, she asked me what day I had free so that I could pencil out the whole day! I managed to get that down to 4 hours!
However, from the clients point of view, it is not going to look like a very good service if I don't agree to her meetings to discuss the queries and because I have a new business, I want her to recommend me.
Do you charge for your drop offs/pick ups etc?
Dangermouse: Discussions about fees etc is what I find the most difficult. I would happily give my time for free, but I do need to earn an income! As you have advised, I will revise my Letter of Engagement going forward and I like the idea of the 'any meeting over 30 minutes'.
I don't charge for pickups and drop offs. But neither would I be happy to meet for 4 hours monthly. I can understand why you feel between a rock and a hard place, but it's easier to hit this on the head earlier rather than letting it go one when it will be much harder to deal with. I think I'd explain to her that the reason I could offer her such a great rate was because of the way I work, I just cant provide the time for meetings that she feels she needs.
This is going to be hard because she is your first client, but if you continue working all these hours for her, when will you get time for more? I doubt she'll find anyone else willing to meet her demanding needs so I don't think she'll leave you. How much is she costing you to keep though?
Yes I agree, I need to be brave and deal with this now.
She has a couple of tax planning issues which I have highlighted and I have offered to liaise with her accountant, so I think she is getting a good service from me.
Client perception is a difficult thing to handle, and unfortunately fixed fees to some people means that they are paying the same fee regardless of what it takes, so you might as well get as much out of it as you can.
It may be worthwhile having boundaries drawn up, either on your LOE or your website, which highlight what IS included and what ISN'T.
While we're on the subject of clients, I recommend you include 'what happens if a client doesn't pay' in there. Reserve the right to charge interest, a late payment fee, charging the cost of engaging a company to chase late payments to the client, a short payment notice period (7-14 days). It means in cases of clients won't paying (rather than genuine can't paying) you have plenty up your sleeve.
It's not easy chasing clients who aren't paying and having all that in your terms means it is much easier to put the tighteners onto people who aren't paying. You have a family to feed etc.
PS. If anyone ever says they won't pay in writing, always keep that email/letter as it is legally admissible evidence to get the client wound up (in the case of limited companies). Just in case one gets really bad.
While it wont harm to have these in your terms, they're not strictly required. The late payment of commercial debts (interest) act 1998 enshrines0 in statute your rights to charge interest on commercial debts and debt recovery costs.
Just because you don't have the terms don't think you cant chase a debt or charge interest on it (in lines with the above legislation).
can I just add to your note that the interest rate in the statute is 8% over base so well worth claiming.
If the interest that you wish to claim is different to the statute then isn't it that the rate has to be given in the agreement per R:)'s comment or the act takes precedence.
I vaguelly recollect something about this being different in Scotland to the rest of the UK Kris. It's bugging me so I'm going to have a dig around in my books to see if I can find what it was (wouldn't even know where to start with a google search on that one!).
Sorry R:) but for some reason every time I write your name like that I keep thinking of the artist formerly known as Prince... Maybe we should go for the accountant formerly known as R:) lol.
Happy weekend people.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Kris, you are right, I think more that most of us find it pretty difficult to enforce terms, and it is easier - at least for me - to go after money I am owed for work I have done if I can point to xyz in the engagement letter they signed. It seems less 'legal' and over the top, than quoting legislation.
I outsource chasing invoices to someone who has no qualms and is ultra polite. I just get wound up.
I am really surprised that you have enough unpaid invoices to outsource them. I would never have thought that non-payment would be a regular issue. I will have to choose my clients very carefully!!
Non-payment is a part of business for many people. I can't speak of whether it is for bookkeepers, but I have many contacts in other industries who have unpaid overdue invoices in the thousands of pounds every month and have to spend hours chasing. They can't charge extra for it, but it pays to have it on board in the terms in case. The online small claims court gets used a lot.
I obviously realise that this is an issue for larger companies, its just that my clients tend to be people that are reasonably well known and respected in the area and I can't imagine them not paying. Maybe its because I am working in a small market town and I research their companies before taking them on. My letter of engagement was given to me by a friend who is a Barrister, so hopefully it's watertight!
I don't actually have an issue with non payment. Most of my clients pay by monthly standing order and because of the chats I mentioned earlier I tend to be able to see any problems coming before they become trouble for me.
Shaun, the legislation is the same in scotland. My terms state my interest on late fees are 8% above bank of scotland base rate. I've never charged this. if you choose to ask more you risk it being deemed an unfair contract term, I'm happy with what the law offers.
Found it... I knew that things were different in Scotland! Just couldn't remember what it was.
Its how far you can go back for claiming the interest on the outstanding debt.
Statute barring in Scotland is five years. Everywhere else in the UK its six years.
Got it from the Credit Controllers desktop guide.
Great book despite it's rather hefty current price tag on Amazon (well worth the £19.99 that I paid for it though).
On page 200 there's an explicit warning that Scottish law whilst very similar to the rest of the UK should not be assumed to be the same.
Pretty sure that I read somewhwere the limited companies formed in Scotland have more protection than those formed in Engalnd and Wales but don't ask me where I read that one as it took me most of the evening to find the bit about why claiming interest was different.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
You're absolutely right Shaun the Prescription and Limitation (Scotland) Act 1973 does time bar debts after 5 years, but only if you haven't taken legal proceedings before the 5 years are up. If you've not, then I would suggest the debt is not that important to you.
I remember this being an issue when everyone was claiming back bank charged, we could only go back 5 years.
