IMGCAP(1)]Are CPAs really afraid to talk about fees with their clients? That’s what Tom Wheelwright, founder of the accounting firm ProVision, thinks.
Wheelwright, an advisor and speaker at Robert Kiyosaki’s Rich Dad Poor Dad seminars, and a contributor to Donald Trump’s Wealth Builders Program, says most accountants are “scared to death” of talking about fees with their clients.
His advice? “Talk about fees early and often,” he said. “Clients don’t like surprises, especially when it comes to fees. So the very first thing we do when a client becomes a client is talk about our fees.”
Wheelwright includes an estimate of fees in his engagement letter. ”It’s about training clients and setting expectations. When we give an estimate, we make sure that the top end of the estimate is more than we could ever conceive it would cost, so the actual bill will always come under the estimate,” he said. “And we look at the estimate and figure out ways to reduce it.”
Wheelwright won’t file the return until full payment is received. “I can’t believe that all CPAs don’t do this,” he said. “You wouldn’t leave a store without paying for groceries, and yet preparers say all the time that they’ll send a bill. Why would you do that?”
Ironically, one of the biggest challenges for CPAs is accounts receivable, according to Wheelwright. “They don’t add value, and no one wants to go after them,” he said. “If you take a retainer up front and the rest before you file, you’ve just eliminated accounts receivable.”
The retainer fee Wheelwright charges is typically about 50 percent of what he thinks it will take to do the return. By charging upfront, he accomplishes two things: “It improves our cash flow, and for the client it breaks the fees into two payments so they don’t get a big bill with the return.”
“Another goal is to reduce their stress,” he said. “We do that by giving them no surprises, and no stress of owing a big chunk of money when the return gets filed.”
“It’s all about training clients and setting expectations,” Wheelwright observed. “If we don’t set expectations, the client will. When we set expectations early and make it clear that we are doing our best to hold them down, it takes pressure off both the preparer and the clients.”
But there are ways you can charge extra fees and have the client be happy to pay them, if the extra fees result in savings to the client, he noted.
“For example, one of our clients had a repair regs issue. We let them know that there was an opportunity to reduce their taxes, but it would take time to go through the mechanics. They were OK with that, and we ended up saving them $40,000.”
Had Wheelwright done the work, billed the client and then tried to collect on the bill without explaining the extra work, it would have completely changed the dynamics and potentially upset the client, he noted. By explaining the situation ahead of time, he became a hero.
