Fear of awkward conversations costing accountants money

By definition, no one likes awkward conversations, but avoiding them is costing accounting professionals real money over the long term.

A recent study from client engagement platform Ignition has found that, like people in any other profession, accountants are generally hesitant to enter conversations they know to be uncomfortable, especially when it involves a paying client. The most common type of awkward conversation dreaded by accountants is chasing down late payments, at 94%, with the second most common involving unpaid out-of-scope work at 90%. The study found that 89% of accounting professionals delay or avoid having these conversations, with two-thirds saying they don't want to damage client relationships and one-third saying they lack the confidence to confront the client, as well as the right information about the agreed-upon scope of work and the skills to negotiate.

These are indeed awkward conversations to have with someone who is paying you, but the study notes that this hesitance is costing accountants real money. Pretty much everyone — 92% — said they experience late payments; on average, 31% of invoices are paid late, with the average tardiness being 30 days. Meanwhile, many professionals react to engagement scope creep by simply absorbing the costs themselves versus billing more, which loses firms an average of $6,386.32 per month or $76,636 a year.

The survey also found there is a morale effect at the staff level from avoiding such conversations, with 44% of respondents saying it made staff feel overworked (for instance, by having to do out of scope work with no extra billing) and 43% said it impacted morale.

The report recommended that:

• Accountants work to minimize surprises and set the client and firm up for success;
• Take the time to listen and invest the time upfront to understand and clearly scope the client's requirements;
• Make provisions for out-of-scope work to set expectations that it will incur additional costs;
• Use industry-vetted templates and ensure their client experience is engaging and professional right from the start;
• Set clear expectations and don't start work without a signed engagement so they and their clients are on the same page on the deliverables and value from day one;
• Regularly review and address any changes in scope with the client early on; and,
• Manage client friction by automating processes such as payment collection to minimize chances of late or non-payments.

"As an accountant or anyone in the professional services world, you're selling your time and experience," said the report. "Your value is intrinsically tied to the price you put on your services. If you don't communicate this early, price it correctly or set clear boundaries about what you can or can't do, it can lead to confusion and awkwardness later on with clients, when they ask you to do this 'one thing.'"