These questions might seem harmless but they add up in terms of time and effort.
Mariajenkins went to Any Answers to see how to approach giving ad hoc advice. She said, “I have a question about specific questions asked of accountants, which could be over the phone or email. Let’s say it’s a short question and maybe there are a couple of emails in each direction, taking a few minutes to respond each time.
“If your client paid you for yearly services, such as payroll and end-of-year accounts, how do you deal with this? Would you say it’s included or do you add a charge to the next invoice?”
The most common approach in the Any Answers community is to include this advice in the annual fee, mainly to keep a good relationship with the client.
One member, SKCOX, questioned that doing anything else could potentially “put the client off asking you things, which is very close to putting them off telling you things”. They said, “Next thing you know, you’re preparing the stat accounts and discover they’ve bought a company car with no inkling of the tax consequences. Then I would wish they’d just asked me.”
This concern for the client-accountant relationship was also emphasised by regular commenter JCresswellTax who responded, “There’s no relationship-building when the invoice is issued and all of the emails and calls over the last year are included with a time cost.”
SXGuy also agreed, “I usually include some time into my fixed fee, and explain it to the client. They tend to be more happy with that than previous accountants who suddenly bill them for extra that wasn’t agreed initially.”
The other reason many AccountingWEB members added ad hoc advice to the annual fee was that they felt it was the fairest approach.
Roland195 said that client care, which involves advice, is part and parcel of what you charge your clients for.
“Within certain tolerances, fees are fixed and quoted inclusive of time for client care, reassurance and hand holding or whatever you want to call it. I would be amazed if any firms other than in higher-end advisory are managing to make a pure time-based billing approach work in this day and age,” they said.
DJKL also noted that with the fees that clients are paying, they should be able to have their questions answered. They commented, “For a client paying me say £5k per annum, I would answer loads of extra bits, but we tended to do this post-arranged meetings”.
Striking a balance
Although most of the community opposed charging per piece of advice, some did say that it was necessary in certain situations when the question asks a bit too much.
Ianthetaxman said, “ If the query comes from an existing client, and it is brief, I would normally expect this to be covered by any existing agreed compliance-based fees. Otherwise, I have taken to responding via email, rather than call, suggesting that their queries may need to be considered in detail and it would be best to schedule a meeting to discuss further and that given the nature of the topic, these interactions will be charged at £x per hour. This way, there is no promise of a five-minute call that develops into an hour, with no prospect of recovering any time spent.”
Others agreed, with regular contributor I’msorryIhaven’taclue suggesting that a tiered model could address the issue of some clients who try to get the most out of their accountants without paying.
“I’m leaning towards a bronze, silver and gold model: bronze service accounts only, silver onwards having varying levels of advice as standard,” they said. “That way those that fly by the seat of their pants, freeload or simply don’t see any value in advice can all subscribe to the bronze model, and pay fees whenever something hits them.”
This article is sourced from the following link:
https://www.accountingweb.co.uk/practice/general-practice/should-accountants-charge-for-ad-hoc-advice
