As practitioners, we all know ‘those clients’. Your heart sinks when you see their number come up on the phone. Your team rushes to avoid them. You’re still chasing them for information days before deadlines – and they often don’t pay on time.
Contrast them with your ‘A-list’ clients, the ideal ones, and it’s clear that something needs to change in how you deal with them.
Do you want to face them again during the next tax filing season?
What is a ‘D-list client’?
There are five main categories of D-list clients:
- They never send information on time.
- Their bookkeeping is messy.
- Your fee is too low for the effort required.
- The work isn’t suitable for you.
- They are obnoxious or difficult to communicate with.
How to deal with these issues
1 and 2: ‘Poor’ or ‘missing’ information
These categories are a question of training.
Train your team to chase early and hard.
Train your clients to do better bookkeeping, and to understand common processes on software and basic bookkeeping queries.
These include a monthly bookkeeping healthcheck (try Dext Precision – formerly Xavier – or Xenon Connect).
By sending clients a monthly ‘score’ you’ve turned it into a game. Our clients are keen to improve their score. And, if the score doesn’t improve, you now have an objective measure to insist they use a professional bookkeeper.
3: Low fees
You ‘just’ need to increase your prices, but you know that already. You’re worried about the client leaving – but what are you risking by keeping them on such derisory fees? Pricing conversations are difficult but necessary. You need to charge enough to do a good quality job, to keep your business solvent and to pay for the best staff and your own mortgage.’
4 and 5: Clients you can’t help
Some are a mismatch and would be better off with another accountant, while others are impossible to deal with and would be better with anybody but you.
We prepare the D-list with our team because they often see a different side of our clients. Anybody who has been on the D-list for two consecutive years also needs to be moved on. Stop making excuses. Accept that they’re never going to change and the only way to save yourself is to walk away.
Keep it simple. Explain that you’re reorganising the business and will no longer be able to provide the service that they need. You can do this by email, phone or face to face. Consider rehearsing so that you can deliver the message and won’t be talked into giving them one last chance. These clients just need to go.
Turning away fees is counterintuitive but you and your team will be much happier. You will have time to provide better service to appreciative clients.
One business shed 22% of its most demanding clients and only lost 6% of its profit, which it soon recovered because it had time to take on more A-list and B-list clients.
It’s tough, but every client I have coached through dealing with their D-list has been so pleased that they happily make it an annual event.
Deal with your D-list. Build the business you first dreamed of.
This article first appeared in Financial Accountant March/April 2023.
Della Hudson FCA is a founder of two practices, a coach and a mentor to help accountants run better businesses.