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Intuit QuickBooks Small Business Index, December 2023
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SUPPORTING YOUR CLIENTS
What do you do when you take on a brand new client whose accounting system is a mess? Or if they’ve got way behind with keeping their books up-to-date?
How do you have the value conversation with your client to clearly communicate the benefit of sorting their books out?
And how do you come up with a fixed price - based on that value - and make sure you don’t have a problem if the clean-up work takes longer?
This is a big challenge for accountants and bookkeepers.
Let’s be clear with a definition of clean-up work:
Clean-up work is what happens when you perhaps take on a brand new client and they want you to deal with their bookkeeping or their annual financial statements, but they’re in a mess. Maybe they haven’t done their bookkeeping for six months. Or maybe they have but they’ve made some errors and their bank doesn’t reconcile. Clean-up work is sorting out the issues.
Clean-up work can be difficult to value price because clients don’t always see the value in the work.
We have to build up the value of the work to the client. There are two aspects to this:
The client will probably already be experiencing pain because they’re behind with their bookkeeping. They’re stressed. That’s why they need you.
They may have cash flow issues because they don’t know who owes them money, and therefore can’t collect any money.
You can also help the client understand the pain they will face in the future if they don’t clean up their books. (Such as problems with tax authorities, penalties, tax enquiries).
You can take away their pain by cleaning up their books for them.
Assure them they will have better information for decision making because their books and records will be up-to-date.
Help them realise up-to-date books lead to more profit and a more successful business.
How do we figure out how much work is going to be involved?
You may be concerned that if you give your client a fixed price up front and the work overruns, you’ll end up working too long for not enough money.
So, you need to assess the amount of work there is before you give your client a price. If there is uncertainty as to the scope of the work, you could have a meeting with your client and ask them questions such as:
How many transactions do you have in a month?
How many months behind are you?
Are you registered for VAT?
How many bank accounts do you have?
This may start to give you an idea as to scope.
A great strategy for working out the scope and getting a good price is to break it down into milestones and price one phase of the work at a time.
Call the first phase diagnosis.
In your diagnosis phase, do some preliminary work and ask the client some scope questions so that you understand the extent of the work. There is value in doing this diagnostic work, because you can show the client exactly what their situation is and provide them with a diagnostic report as part of this service.
Charge them for this process because it’s valuable to them.
Armed with what you’ve learnt about the extent of their mess, you can price phase two, which is the clean-up work itself.
Now you know the extent of the problem, you can give a more accurate price. You can also offer the client several potential solutions and present them as different packages.
You might want to ask:
Are you behind with the filing of your tax returns?
Are you behind with payments of taxes?
If someone has come to you because they’re behind with the filing of their tax returns or they’re behind with the payment of tax, they’ll be under pressure from the tax authorities. There’s a much greater sense of pain.
The need to sort this out is much greater. There’s a greater sense of urgency and therefore there’s more value in fixing the problem.
You can have a higher price when there’s a greater sense of urgency.
In an earlier blog post, I talked about how to price moving clients onto QuickBooks now that we having Making Tax Digital in the UK.
Of course, if the client’s books and records are a mess before you move them onto QuickBooks, I recommend you always price clean-up work as a one-off project.
You should absolutely be charging premium prices for clean-up work. If you give a fixed price up front, you take on all the risk. The client has certainty. They have a fixed price, they can plan and budget. There is value in taking away the risk and therefore you must charge a higher price.
Watch value pricing expert, Mark Wickersham,explain how to value price clean-up work.
Find out more about how QuickBooks can support you moving your clients online here.
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