5 Mistakes Accounting Professionals Make when Onboarding New Clients
First impressions set the stage for all relationships. But, unfortunately, many accountants don’t practice this when they onboard a new client, so they make mistakes that unnecessarily complicate things. Liz Farr recounts the top 5 she saw during her time in practice.
First impressions set the stage for all relationships. We all know this. But, unfortunately, many accountants don’t practice this when they onboard a new client, so they make mistakes that unnecessarily complicate or distort that relationship.
As Malcolm Gladwell said, “We don't know where our first impressions come from or precisely what they mean, so we don't always appreciate their fragility.” In my time in public accounting, I saw plenty of mistakes, and unfortunately, not many best practices. Here are the top five that I saw.
1. Onboarding the Wrong Clients: Some clients just don’t belong in your practice. Maybe you don’t have the industry expertise, or maybe the client’s personality or business practices make this a bad fit. Or perhaps they use accounting software that you’re not familiar with. Sometimes the best service you can perform for a client is to send them elsewhere.
I saw this more times than I can count when partners brought in clients in industries that we had zero experience with, or who were a nightmare to work with. Some were both. Keeping those clients may chase away the best and brightest of your staff. As an added bonus, lack of industry expertise may leave you open to lawsuits if you and your team miss something big.
In our increasingly complex world, no accountant and no firm can possibly know enough about every kind of business to provide high-level services to everyone who walks through your door. The best relationships develop when both sides benefit: the client gets the services they want and need, and the firm gets work that’s financially rewarding and professionally satisfying.
2. Not Asking Enough Questions: Most firms collect basic information – phone numbers, email addresses, prior year tax returns – enough to add a new client to the project management and billing systems. Many firms stop there. That was about all I was expected to gather when I met with a new client.
But how can you really help a client if you don’t know what they’re trying to accomplish?
At the very least, you should ask a new client questions about their business and personal goals, their long-term plans, and who their legal and investment advisors are (if they have any). Even if it’s a startup, it’s never too early to ask about their exit strategy. Don’t be afraid to go deep with these questions.
It’s hard to be a true advisor to a client if you don’t know what they’re trying to achieve and what their projected timeline is. Just starting the conversation about these topics positions you as someone who genuinely cares, and sets you up to provide additional services down the road.
The information you gather here shouldn’t be just taken down and filed away to be forgotten. This should serve as the beginning of an ongoing dialogue. At least once a year, these questions should be revisited to see if anything has changed, and to see if there are other ways you can help your client reach their goals.
3. Not Having an Onboarding Process: Onboarding a new client should not be a once-and-done occurrence. Like courtship, both parties have a lot to learn about each other, and trying to cram it into one meeting can be overwhelming. Breaking this into a series of thoughtful steps can help put your new client at ease that choosing your firm is the right decision. The first step might be a pre-qualifying questionnaire to gauge whether this prospect is a good fit for your firm. This will help you avoid onboarding the wrong clients.
Your new client needs to learn how best to work with you. This can be provided in the form of FAQs that educate your client about your firm’s processes for getting the work done (you do have firm-wide processes, don’t you?). Here are some examples of what these FAQs should cover:
- Who should they contact with questions or concerns? Do they need to go through the partner or manager, or do you have a client liaison? Make sure your new client has the contact information for the right person.
- What is the preferred process for exchanging information? If you have a portal, consider including instructions for using it, perhaps in video format.
- What format is best for getting information to you? PDF only, or is paper acceptable? What about photos taken with their phone?
- What are the deadlines for getting information to you? For example, if they want their tax return completed by April 15, what is your cutoff date?
- What is your usual turnaround time for work?
Your firm likewise needs to collect information about them. Depending on the services you’re performing, you may need logins and passwords for their accounting software, payroll service, and bank accounts.
Another step in the process might be a formal introduction to the staff person who will be either doing the work or who will serve as a client contact. This serves two purposes: one, this alerts the client to the names of people in the firm who may be contacting them so they don’t delete an email or ignore a phone message. Second, this alerts the staff person that new work will be coming to them.
Your process should also include a timetable for regular check-ins with a client. Maybe once a quarter you check in with a brief email or invite them to coffee. Small, regular touches will make them feel valued.
4. Failure to Scope the Engagement: This is the biggest source of problems in client relationships. Onboarding a new client is the perfect time to set the expectations for both sides of the relationship. If the scope of the engagement isn’t clear from the beginning, or if that scope isn’t enforced, then it’s way too easy for scope creep to swallow you alive.
We’ve all been there. As professionals, we want to help our clients, and we want to provide excellent service. It’s so easy to keep on saying yes to additional tasks, or to be pulled into the bottomless pit of cleaning up books that were presented as “everything’s there, you just need to plug the numbers into the tax return.” Except it’s not. Not even close. The deeper we get buried in the work, the harder it is to lift up our heads and notice that we’re doing way more work than we discussed with the client. And because we’re pressured by deadlines to get the work out the door, we never discuss all the extra work we’re doing with the client until it’s way too late to do anything about it.
If you’re billing by the hour, you might feel obliged to write off those extra hours, lest you alienate the client when the bill is significantly higher than promised. If you’re billing on a fixed-price basis, that extra time can kill your profitability, not to mention making you and your team work longer hours on just that one client. All those extra hours can make your team resent the client – and maybe even you. If you’re value billing, hopefully you’re staying on top of this. If not, this will be fatal to your attempt to move away from the billable hour.
One of my friends runs a thriving outsourced bookkeeping practice, and one of her secrets is tight control of scope. At the beginning of each engagement, she creates an agreement that defines the parameters of the work to be done, which the client must sign off on. This agreement is created only after a thorough review of the client’s existing records and a clear understanding of the client’s particular challenges and long-term goals.
This document is placed at the front of an electronic workbook that holds all the information that the assigned bookkeeper needs to do the work: all the logins, passwords and client-specific instructions. This helps the person doing the work understand what has been agreed to, and what has not. Any deviations beyond the scope of work are immediately brought to the attention of the bookkeeper’s supervisor.
Yes, this takes discipline. But the reward is not getting buried as a tiny extra bit of work snowballs out of control.
5. Ignoring Capacity Constraints: Congratulations, you just signed a juicy new contract with a client you’ve been pursuing for years! There’s just one problem – your team is already working as hard as they can, and they just don’t have anything left. They won’t be able to give that new client the white glove treatment you promised without seriously shortchanging other clients. Your team members aren’t the only ones feeling overwhelmed – you’re probably having a tough time yourself keeping up with the demands of your current clients in the face of rapid-fire tax law and accounting standard changes.
Hiring a new team member is tough these days, with the unemployment rate for experienced accountants around 2 percent or lower. Plus, until the new person gets up to speed, you can count on a drop in overall firm productivity as your senior team members show him or her the ropes.
One solution might be to fire some of your D-level clients to free up some capacity. Ask your team which ones they hate working with the most, and cut those clients loose. Your team will thank you. Many firms that do this find that the lost revenue from those D-level clients is rapidly replaced when better ones come on board, or when that new-found capacity allows them to offer additional services to existing clients.
Another solution might be to streamline and standardize your processes using technology. Just a few years ago, I spent a few months at a firm that was not fully utilizing the automation tools they had. Tax staff were manually entering all the numbers in tax returns. They boasted to me of their typing speed, but all I could think of was the time they could have spent thinking about those numbers, not typing them.
Or, maybe, you’ll take a different approach. Do you need a degreed accountant for every role? Automation is taking over the entry-level, data-entry-type work that brand-new staff accountants used to do. Maybe you can break up your processes into steps that can be delegated to someone who just does those repeatable tasks.
Above all, onboarding a new client should not be rushed. Avoiding the mistakes I note here means you’ll have to slow down and make sure this is the right client for your firm. You’ll also be able to provide stellar services for years to come. Onboarding is an opportunity to bring new clients into your world and turn them into raving fans as you transform their businesses and their lives.
Liz Farr, CPA, spent 15 years in tax and accounting at small firms in Albuquerque, NM. Besides tax returns of all flavors, she worked on audits of governmental entities and not-for-profits, business valuations, and litigation support. Now she's a full-time freelance writer specializing in content marketing for accountants and bookkeepers around...