Secure Returning Clients for the 2022 Tax Season
As another tax filing deadline looms, CPAs across the country are going to deal with one of the harder parts of the business: retaining clients. As the usual loss of clients occurs, many firm owners begin to ask, “What can we do to keep our clients?” Rather, the question you should be asking is: “How can we better serve our clients?” And well, that’s simple in theory: Increasing your clients’ satisfaction is the main way to increase client retention.
Let’s start by talking about surprises. Surprises can be a good thing. Everybody loves the video of a perfectly pulled-off shout of “SURPRISE!” at a surprise party, and we’ve all cried at a video where a soldier surprises their family when they come home. However, when it comes to taxes and accounting, nobody likes surprises of any kind.
So, anything we as accounting and finance professionals can do to prevent surprises should be first and foremost in our minds. Creating a consistent, almost boring, relationship, without surprises is a good thing in this instance, and you’ll find your clients aren’t dissatisfied with it. In fact, eliminating unexpected occurrences is actually the best way to keep the magic alive when it comes to the relationship between an accountant and their client.
Stop Creating Surprises
One of the first surprises we eliminated at our firm was the bill. To do this, we went to a subscription-based pricing model several years ago, and we did this for two very good reasons:
1. Clients want to know. That really should be enough. If we want to keep our clients happy, it starts with a clear communication of the cost. Everyone wants to know what something is going to cost before they make a purchase. When you bill in advance and a client thinks the amount is too high, they contact you before the work is started. This is as opposed to reaching out to you after the work is done, when it is too late and you may be forced to incur a write-off. Most importantly, not worrying about billing and collecting allows you to plan ahead for clients who typically fall behind and help them get prepared for the deadline. Accounting and taxes are stressful enough for you and your clients, so eliminate the stressors that are completely avoidable.
2. It’s a more efficient process for billing. We send our bill and engagement letter together with a summary page on top detailing the services and costs. The clients clearly understand the services and their prices, and they are not overwhelmed by a long legal document that solely seems designed to confuse and annoy. It is more efficient for them to read and for you to prepare. For instance, I get a summary of what each client was billed for the previous year and how much time we spent on the client in that time period. It shows the adjustments up and down and then a proposed fee for the coming year based on a firm-wide increase for raises, etc. based off whichever value is higher: the time spent or the amount billed. I review, ask questions and finalize. It goes with the engagement letter and, due to an automated process that we created in-house, the bills and engagement letters go out automatically. I spent less than an hour on billing, collections and engagement letters for 2020, and our clients are more satisfied with this method.
Stop Enabling Surprises
Clients do not like big tax bills, especially if they did not believe they would owe much or anything at all. In particular, cash-basis taxpayers in a bad year often believe they will not owe anything, but large decreases in receivables and/or increases in payables can create taxable income their financials may not reflect. Often, businesses in decline hoard cash, creating more taxable income. In reality, the taxes could have been reduced or eliminated just by paying the bills they could with some of the money they now need for taxes.
This is where you come in: You can see what’s coming, even if these clients can’t. The best way to stop enabling surprises is to build tax planning in with your services, offer a plan, and not only plan to be proactive, but commit to it. Include the idea of a financial checkup in your plan, and make a checklist that will be used to ensure everything is done. Use that opportunity to disable more surprises by updating your depreciation software for fixed-asset additions. Then, check if the client’s retained earnings have changed, and if so, have a trial balance ready to see what accounts changed. Be ready to provide and post adjustments at that time. Also, if you have an import tool you use for data entry at the deadline, this is the time to map those accounts and update it for new items in a client’s chart of accounts.
When you send an engagement letter with tax planning, some clients will not want the plan or financial checkup. Don’t be discouraged. Instead, look at those as opportunities to help these clients get better service, especially if they always have issues and create filing deadline crises. If you ultimately determine it may be best to not work with that client, then you opened the time to do more proactive services for the clients that wanted to upgrade.
Stop Getting Surprised
To be a better accounting professional, learn to expect the same “surprises” every year. I don’t just mean the obvious, predictable things, like the same client creating a headache at a deadline every year. I mean stop getting surprised that surprising things happen because they always happen. I live in Texas and this year, in 2021, we had a statewide freeze that shut down our power grid and internet for a week during tax season. It also meant no heat, so pipes froze and then cracked. Once the freeze ended, the water started flowing everywhere, and the flood damage was massive. Everyone missed a week, but because of other extenuating circumstances, our firm lost almost two weeks per tax professional during busy season.
Everyone has stories like this. For instance, I have a CPA friend who had an office-wide COVID-19 outbreak that ended right before the freeze hit. And, of course, we shouldn’t forget the time we experienced a worldwide pandemic that locked down our economy. In the years prior, it was something else. That’s my point: Something always happens. Plan for these, anticipate them, and if you end up being wrong, then you have bought more time. Clients will appreciate your preparedness and ability to not only navigate change, but be in the moment with them in a potentially unsettling environment.
You know what else shouldn’t surprise us? The annual filing and reporting deadlines that occur in the first quarter of every year. Tax and audit both, we have the same year end and the same deadline every year, but we let events be excuses for a crisis in our firm in the days leading up to the deadline when we knew the deadline and a surprise were coming. As a profession, we are all focused on the 60 to 90 days before the deadlines. Whether we call it busy season or tax season, we all know those deadlines for this year, next year and the year after that. I know my clients and which deadlines they will have this year, next year and likely the year after that. Why is that kind of consistency and predictability a bad thing? Everyone has the same deadline. Most industries would love that kind of predictability! The ones that have it, like retail at Christmas, prepare for it by ordering stock, determining what the customer will want, hanging lights and look forward to that time of the year, but we in the accounting and finance profession do not prepare in this manner, and our customers pay for it.
Create Change Before It Surprises You
You know your clients, and you know the problems you encounter better than any solution provider, better than anyone (other than perhaps other CPAs). CPAs hate change, but our profession is in desperate need of one. As firm owners, we can either embrace these changes, or we will get swallowed by those who do.
What does that look like? If there are consistent problems you encounter, research solutions that are available that will give you more time to be proactive. Then, buy them, and make sure you buy the premium versions. Invest in technology that will improve your client services, and make sure your clients are aware of the improvements. They will feel valued by you investing more into the service you are providing.
If you cannot find a solution for a problem you have had for many or all your clients, talk to your technology partner and help them understand the problem so they can perhaps create a solution. If they cannot, or will not, find a different solution provider. If nobody offers a solution, then build one. Programmers can be found, and if it is a big task, talk to other CPAs and share the cost. Even better, work with your client to create a mutually beneficial solution that may even turn into a new business opportunity for you.
How will you benefit by implementing these changes? Well, I can only tell you what we’ve experienced, but as a result, our client satisfaction is up, and client retention is on track for 100 percent. I have positive emails from new clients with large multistate consolidated filings and financial statements that never filed all their returns this early before. I have historical clients that never been ready to file until the day of the September 15th deadline express joy over not only being ready to start on returns before the extension, but filing the return without one. I have had clients post reviews about our firm about being proactive and helping with PPP loans this year, and, most importantly, I have not seen one email asking, “Where is my return?”
The only surprise that clients might appreciate is that you made the changes necessary to offer better, more efficient services rather than a relying on the same old excuses. Delivering a standard of excellence is the best way to keep all your clients happy, this year and for years to come.