11 Clues a Client is a Loser and 4 Keys to Finding a Winner

by Jean Caragher and Rick Telberg
SevenKeys CPA

Every CPA firm has clients who are no longer a good fit – clients with little growth potential, clients who are slow to pay, clients who treat CPAs poorly.  Bad clients have an impact on profits, productivity, and staffing.  The leading firms are doing something about this.  Our research shows that SevenKeys Leaders are nearly three times more likely than SevenKeys Laggards to fire clients that don’t fit their target.

 

Firing clients is an effective way to manage growth and profitability.  Evaluate clients on a variety of criteria including:

 

1.       Fee

2.       Realization

3.       Ability to pay

4.       Year-end

5.       Opportunities to cross-sell

6.       Growth potential

7.       Risk

8.       Leads received (or expected) from client

9.       Does the client enable our firm to establish or build a niche?

10.   Does the client need our firm’s expertise?

11.   Can our firm still serve the client to the best of its ability?

 

Then determine whether you can increase the fee or refer the client to another firm.  Firms that implement this process on an annual basis are more profitable, focus on their best clients, and have a happier staff. 

 

Yet most firms are more likely to accept inappropriate clients and fire them in the future than they are not to accept them in the first place.  A formal client acceptance process, utilizing the criteria listed above, would help prevent clients from passing through the revolving door.

 

Establish client acceptance criteria.   Assign a gatekeeper, your firm’s marketing professional, for example, who will track the types of opportunities partners are working on by asking strategic questions:

1.       Does an engagement support a particular niche within the firm?

2.       Are there opportunities for cross selling?

3.       Does the client have a good payment history?

4.       Could we fire an inappropriate client and take on one that is a better fit for the firm?

 

Do not inform clients that they are being “fired” by mail.  Depending upon the length of time they have been a client or fees paid consider a face-to-face meeting or a telephone call.  This also gives you the opportunity to remedy the situation and keep the client.


 

For more about the Seven Keys to Successful CPA Firm Management, download the executive summary (PDF, 11 pages) at http://sevenkeyscpa.com/exec.

Copyright 2011 Seven Keys CPA. All rights reserved.

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A blog by Jean Caragher and Rick Telberg
New insights into the winning habits of high performing accounting firms from The SevenKeys to Successful CPA Firm Management.

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