Pricing considerations in a changing world
Demand for accountants’ services is most probably at an all time high as many firms help their clients to weather the current coronavirus crisis.
Some client problems might be straightforward and can be answered in a short five-minute phone call, but what about other adhoc matters which have arisen and can take up substantial time such as Job Retention Scheme (JRS) claims or helping clients with Self-Employed Income Support Scheme questions?
Accountants have been putting in hours and hours of billable time to assist their clients without having an upfront conversation on how they are going to be rewarded. The answer to this, of course, depends on the pricing model you have adopted to date so there is unfortunately no ‘one size fits all’.
Whilst some accountants argue that they see the hours spent as an investment in their client relationships, without communicating this to their client they are unlikely to know, or appreciate, the effort that has been put into these troublesome matters. Another school of thought is that work should never be discounted as it challenges the integrity of the services accountants provide. Many accountants have been practising for years and have been training for many more, so yes a claim might only take a few hours but that is because you have the experience and years of studying behind you to prove it.
This subject has been the topic of many articles and webinars considering the broader picture of pricing for services during the current pandemic.
Here are some key takeaways in the area:
1. Offer information, not services for free - new information is released daily which accountant’s digest and pass on to their clients. The priority right now is to arm your clients with the correct information via webinars, regular email updates, private online groups or Q&As, for example. If you can systemise the way you share information with clients, reaching many at once rather than having the same conversations with multiple different clients it will free your time to work on value-added services. Now is the time to show your worth and how you can help your clients.
2. Continue to charge for services - now more than ever, clients need accountants to help guide them through this challenging period, providing analysis of the various options available to them, cash flow projections and how this all fits into the bigger picture. The key is communicating the value you are providing to the future of your client’s business. No business can stop charging entirely and clients do not expect to get advice for free. By not charging for a service, you are sending a message that what you do has no value which will impact the respect your client has for you. For some, there might be slack within current fee arrangements to allow for additional advice, but consider what the client issue is. If they cannot afford to pay, in all likelihood they may not be a client for much longer in any case, but if they cannot afford to pay at this time then that is a different proposition. You could freeze billing, or defer payments, so that you are still retaining clients and assisting them when they need it while retaining the expectation that payment is expected down the line.
3. Keep open lines of communication - staying in touch with clients during this time is paramount. Pushback from clients often won’t come from an expectation that services are free but because they are unaware of the amount of work that has gone into a service and a conversation was not had up front about what benefit this would bring for the client. A phone call will go a very long way to genuinely check-in on your client and see how they are. If firms lead the conversation correctly, clients will be accepting of paying for extra services. Proactively suggest ways in which clients cashflow can be assisted which can have the benefit of freeing up working capital to make sure you don’t bear the cost within your own lockup. Has the client accessed all available grants and short term low cost loans (such as the bounce back loan scheme for example)?
4. Offer different level ‘packages’ - talking with your clients and assessing their situation on a case by case basis will pay dividends. Some might be slowing down whilst others are ramping up and want additional guidance or coaching. Some might have an in-house accountant so just want the information to do the remainder of the work themselves, some will require a walk through of the options and an in-depth look at their current financial position.
As the economic impact continue to deepen, some may already be reconsidering their approach if they decided not to charge clients initially. Accountants ability to problem solve and prove their worth in challenging times might just change the face of the industry and the way in which pricing in considered – changing the mindset from ‘how much should we charge’ to ‘what is the value to my client’.
The future of accounting
As new ways of working begin to form within the profession, so too will the way in which practices invoice their clients. The concept of time-based billing is over 100 years old so it is a somewhat outdated theory. Client’s do not usually like time-based options as they have no certainty of what they might pay, furthermore there is also a conflict of interest. The client will want you to get the job done as quickly as possible but as far as the accountant is concerned there is no incentive to complete the job any faster.
Time-based billing focuses on the costs, not the outcomes, so rather than being concerned with the results generated for your client and working smarter or more efficiently through innovation, the emphasis is on the inputs. This essentially rewards ‘busyness’ and utilisation rather than effectiveness and satisfaction. Are you providing the best experience and service you can to your client with high quality deliverables and solutions that drive the results of their business? It is often unlikely that 100% recovery is made in any case. Time records work for internal management purposes within the firm but are no longer necessarily for pricing.
Recent events have shown the importance of an entrepreneurial spirit – accountants being problem solvers and adding value, helping clients achieve their goals rather than as units of time on a production spreadsheet. Clients want solutions and peace of mind. It therefore requires a change of mindset, focusing on the client’s outcomes – be it a saving of x, profit growth of y, a four day week or survival – rather than having employees who are worried about utilisation and ‘time on the clock’. Working in a result driven environment, means accountants are incentivised to find more efficient ways of doing things with the focus entirely on the client.
Inevitably, the increased use of technology has meant that some mundane accountancy tasks are now automated. This has obviously been accelerated in the last few months as firms move to tech to enable work to continue with as little disruption as possible. Whilst compliance type work will become easier and less time consuming, it has reiterated the point that the future of accountancy will lie in the ability of accountants to interpret the numbers and translate what they mean to clients.