In an industry where most professionals spend their days bending over backward to meet ever more complex (and sometimes ridiculous) demands to keep clients happy and business growing, it may sound strange to think about the best ways to fire a client. That goes double when the entire country is staring down the very real possibility of a recession. But that's exactly what accounting professionals may need to do to weather the coming storm.
In 2023, new guidance, evolving regulations and increased enforcement are set to make an already challenging time for accountants even more stressful. But in every crisis, there is an opportunity.
Many accounting pros enjoy relationships that provide a view across the client's complete financial and business profiles. Unlike financial advisors, who tend to focus on investments, or business consultants who tend to focus on strategy and process, accountants are privy to the most intimate details of the financial inner workings of their clients' lives and often form close working relationships with business owners. They're also highly trusted. Consistently ranked among the top ten most trusted professions — right up there with nurses and firefighters — CPAs have a reputation for shooting straight with their clients.
That positions accountants uniquely to expand their offerings to include more broad-based advisory services. Taking on these new roles can be dually beneficial. For accountants, it provides new revenue streams and deeper client relationships, while clients consolidate their spend with a single trusted advisor as opposed to a disjointed assortment of financial advisors, business consultants and others who might have conflicting interests.
Unfortunately, not every client will be able to fit this bill. Some simply won't align with your strategy, while others haven't been the easiest clients to deal with in a smaller role. How do you spot these cases and what's the best way to extricate yourself from them before they suffocate your growth potential? That's the very real dilemma tax professionals need to confront as we approach a game-changing tax season.
What does a bad client relationship look like?
The overarching principle of determining whether you're in a bad relationship is this: The value produced by the client must equal the value consumed by the client.
If this equation is consistently out of balance, then the client relationship is destined to erode over time. And with that erosion comes a slow burn of time wasted and productivity lost due to not being on the same page.
Firms can try to teach, share and provide more value each year, but if the client doesn't take the advice, there is an inevitable parting of ways coming. When evaluating an individual client, it's important to take a careful inventory of your past interactions. Have these clients worked with you on any problems that have cropped up? Have they taken the time to understand the counsel you've given, whether they ended up taking the advice or not? Odds are that if you answered no to any of these questions, the relationship isn't going to get better as the tax landscape becomes harder to navigate.
Clients don't necessarily need to be a proverbial problem child to be on the chopping block either. Some may be small in size, but will require a significant investment in company resources to manage. In this situation, many firms will find themselves in a Catch-22, caught between loyalty to a client and what is financially best for their firm. It's a delicate line to walk, and accounting pros need to make sure they've exhausted all opportunities before they part ways.
How to properly play gatekeeper
Figuring out how and when to end a dead-end relationship is a way to treat a symptom, but it's not the root cause of the issue. Tax pros who find themselves in these situations usually do so because they have unwittingly put themselves on the defensive.
When a firm takes on a client, the way in which it does it sets the tone for the relationship. If firm leaders are proactive in prioritizing the right types of clients during recruitment, it defines how subsequent interactions will unfold. The firm should always lead the agenda, with the client as a collaborative participant in the relationship.
Many firms are too eager for business — any business — and ultimately let the client define the dynamic of relationship. Firms that are good at assessing what type of client fits their culture and have good future advisory growth potential can often avoid having to try to scramble to dissolve a relationship after the damage has already been done.
The time for change
Ahead of the 2023 tax season, there's truly no better time to say goodbye to a client that doesn't fit your culture. The Inflation Reduction Act introduces a host of new
That's why it's so important to make sure your clients see your firm as more than just a tax team. If you have been a compliance partner for a client, you're already in a de facto advisory role. When you can help your client see that your compliance advice is a broader part of a holistic strategy you can provide them, it can be a huge opportunity.
Still, whether you're dumping a client or expanding your relationship, these are not easy conversations. But tackling a bit of awkwardness now is worth it if it can save you from an endless amount of stress and unprofitable work later. If you want a championship tax culture, everyone — from preparers to filers to business developers — need to be both on the same page and aligned with your recession-time strategies. Now is the time to cut those who aren't.
