6 Warning Signs It's Time to Let a Client Goby
Managing personal relationships at your firm isn't just about knowing how to expand your client base. It's also about recognizing that sometimes, a relationship with a particular client just simply isn't going to work out. Here are the red flags to watch out for, as well as expert advice about having that tough conversation.
Business is all about relationships. When you work with clients, you get to know them on a business and a personal level. You might ask how their family is doing or about their recent vacation, and you may genuinely like the person.
However, there will likely come a time when you should “fire” a client.
Business is business. When a relationship no longer makes sense for you, it’s okay to let that client go. The question is: How do you fire a client the right way?
Warning Signs You Might Want to Let a Client Go
When working with clients, there are often a few warning signs that they’re not a good fit or you should let them go. You might be ignoring these signs, but they’ll often be there. If you’re experiencing any of the following, this is a client to consider letting go:
- The client doesn’t respond to you in a timely manner. If you need a form for a client’s tax return and they wait until the last minute to supply it, this is a red flag. Timeliness is crucial to a healthy working relationship.
- Boundaries don’t exist. In the adverse scenario, some clients have zero boundaries and will do things such as text you nonstop or call after hours and expect an immediate response.
- They demand unnecessary time from partners or owners. Some clients fail to communicate with the team member assigned to them. If a client demands to speak to only a firm partner or owner, they often cause long-term headaches.
- They frequently cancel or just don’t show up at all. Some clients cancel at the last minute, forget meetings or even show up late. Sometimes, life happens and you can gloss over these issues. However, if it’s a routine problem, it may be time to fire the client and reclaim your time.
- They are (extremely) error-prone. These clients make errors over and over again, and they expect you to address these mistakes every time.
- They second-guess you. Clients have the right to ask questions, but when they often lack confidence in your expertise, they may be better served by another firm.
- You have issues getting paid. If the client isn’t willing to pay for the value you provide, is always asking for a discount, doesn’t pay on time, or you need to chase them down for payment, consider letting them go.
Once you’ve identified problem clients and those who may need to be “fired,” it’s time for the next step: actually letting them go.
How to Let a Client Go
Once you’ve decided to fire a client, it’s time to take action. Too often, firms just think, “I’ll raise prices, and the client will leave due to the price increase.” However, this will backfire with some clients, and they may accept the higher price. I don’t recommend this approach.
Instead, I recommend the following:
- Be upfront with the client and give them fair notice that you won’t be providing services to them after a certain date.
- You don’t need to explain your “why” behind letting them go. Rather, be diplomatic and say something like, “We’re going a different direction and focusing on offering specialized services to clients in a certain niche that we can add more value to.” Be respectful, and don’t burn bridges with your response.
- If you know someone who would take on this client, you can make a referral. You can even consider an AI-driven service provider who may be able to better serve this type of client.
If you’re in the middle of an engagement or contract with the client and need to finish it up, ensure that you do your best work and provide the same level of service as you have in the past.
It’s easier to let go of some clients and not as easy to let go of others. If you take a respectful approach and hold your ground, you’ll move to the final part of the process: offboarding.
Offboarding the Client the Right Way
Once you’ve broken the news to the client, it’s time to get everything in writing so that you can “break up” with as minimal issues as possible. A few things that you’ll want to get in writing include:
- Final service date
- Technology transition to remove the firm’s access to subscriptions and applications. For example, if the client provided you with view-only access to their payroll software or bank account, you want to have them remove this view-only access.
- Provide the client with a list of services that you provided at a high level. Note, this doesn’t include providing them with instructions on how you provide these services.
- Offer a download for all files and documents relating to the client so that they can take ownership of them.
- Provide a date when all copies of their records will be deleted or removed. Consider waiting 30 days to delete and remove files.
You may continue to offer paid support for a short period of time. For example, for X fee, you can help the client with questions or finding a specific document.
Offboarding that is done tactfully will help you avoid any potential issues from arising, such as the client stating, “I didn’t know service would end on December 1. I thought you were finishing up ABC.” When you have everything in writing, you can refer back to it and stop any confusion with clients almost immediately.
Final Words of Advice
It’s not always easy firing a client, and you may feel uneasy about the process. Even if the client is a very likable person but simply not a good fit, don’t let this be a reason to not let them go. Stick with your gut. Don’t allow the client to convince you to stay because you’ve already determined that they’re simply not a good fit.
One mistake that I see many firms make is viewing firing the client as just losing revenue.
You also need to look at other aspects of firing the client:
- You’re gaining time to serve existing clients
- You open space for your ideal clients
- You reduce stress and last-minute cramming for team members
- You help avoid bad reviews
Remember, you’re running a firm and need to do what’s in the best interest of the firm. Like any bad relationship, it’s better to cut the cord and go your separate ways. Once you do, you’ll quickly realize that you now have more time to better service the right clients and don’t have the stress that the client brought to your firm and team.
Judie McCarthy is a QuickBooks ProAdvisor (Advanced Certified), speaker, author, experienced accounting professional, and co-founder of Client Hub. Client Hub is a one-of-a-kind, all-in-one web-based, frictionless workflow and client collaboration tool built for accounting professionals. Client Hub takes communication out of cluttered,...