More Accounting Tomorrow Posts

Stop working for free and bill during billing season

May 2, 2011

One of my partner clients logged 127 personal billable hours during the last week of tax season. As hard as this is to imagine, think about only getting paid for about 90 of those hours. That’s right—give 30 percent away for free. What might amount to the hardest dollar you ever earn in an entire year is sadly often given away for free. And that’s what this partner client was thinking about doing until we spoke.

I’ve heard the reasons and excuses year after year. They are quite plentiful, actually:

1)      The client won’t or can’t pay more; I’m afraid that we’ll lose the client if we bill them more

2)      I’m afraid to have the conversation with a client to explain why we need to bill them more

3)      It’s my fault; I should have leveraged the work better

4)      This client probably isn’t a match for our firm any longer, but I can’t fire them for “x” reason

5)      It was our inefficiency that boosted the WIP, not the clients’ fault

While some of these reasons seem bullet-proof, they are actually pretty flimsy. Here are a few ways around and alternative approaches that will help you bill (and get) more of what you deserve.

1)      If the client can’t or won’t pay more, maybe you shouldn’t have the client in the first place. You can’t drive a BMW for the price of a Kia. A few alternatives include passing the work to a manager to “own,” having a discussion with the client about the need to raise their fees, or making a referral to a less expensive firm. Don’t live another year with this client in the same situation that causes you to give away time.

2)      If you’re afraid of having a fee conversation with your client, practice it on one of your partners first. Have solid reasoning. Consider their reaction and be prepared with a concession or two. Often, these types of conversations can yield stronger client relationships in the long term because you can “help them help you” achieve a more efficient result for all involved.

3)      If you were preparing and reviewing returns this year that you shouldn’t have been, shame on you today, but learn from your mistakes tomorrow. Plan to succeed next year to prevent a repeat performance. Three strategies to accomplish this are: having more staff available, delegating ownership for clients to others in advance, or increasing fees to the level where you are getting paid for your work.

4)      If you have a legacy client that is no longer a fit, but firing them seems unconscionable, you have a few choices. Transition the client responsibility to someone with a lower billing rate, have a “heart-to-heart” and raise the fees for the client, or live with the fact that this type of client will reduce your earnings and compensation and you’re not going to do anything about it. Just don’t have too many of these clients…

5)      The last reason I hear, actually, has the most credibility. However, it is not something that should repeat year after year without recourse. If the WIP is truly loaded due to inefficiency, then you have to write off time – but you should also fix the inherent problem(s). However, if the WIP is loaded because the job truly takes more time, then you need to follow one of the previous strategies – because the price is misaligned with the value.

In closing, we’re in business to make money. If we give away our time, we are giving away money – and I cannot think of a worse time to give away money than during the busiest time of the year. I hope these strategies help you take home more of what you’ve earned today and into the future. Even a few small steps can make a big difference. I’ve seen how a 90-minute discussion on billing strategies can yield an extra $10,000 in revenue that was slated to be written off! Good luck and I’d be thrilled to hear of your success.

Art Kuesel, Director of Marketing Consulting Services for Koltin Consulting Group, helps CPA firms across the country hone and maximize their growth plans, build effective marketing and sales efforts, coach partners and managers to greater success and add revenue to the top line. Koltin Consulting serves CPA, law and financial advisory firms with strategic growth, M&A services, executive recruiting and management consulting services. Art can be reached at 312-245-1745 or


Comments (4)

I appreciate your comments and position. I should have included a number 6 tip (or #1) and that would be to "avoid this problem next year altogether" and offer your suggestions. I agree that many of the loaded WIP situations described can be avoided with better advanced communication, and price quotes, when and if applicable.

However, based upon what I've seen, many CPAs need help dealing with the issue today as well as help and guidance to avoid it going forward.

Hopefully this post has provided some helpful tips to those who are facing heavy (or even moderate) write-offs with ways to minimize their "losses" today - and with your comments can start to reframe the issue as a pricing and value problem rather than a WIP problem.

Art Kuesel, Director of Marketing and Growth Consulting, Koltin Consulting Group
Posted by akuesel | Thursday, May 05 2011 at 12:22PM ET
It's easy to take potshots and say 'CPAs should bill upfront'. Problem is, if you quote a Schedule D at $75, assuming that the typical client makes six trades, you'll lose time AND money working on the client who says that they have a 'simple' return and brings you 191 trades because they've become a day trader.

In other words, you don't know how much work you'll be doing until you do the work, and by pricing upfront you set yourself up for people to take advantage - and take advantage they will.
Posted by gzbylut | Wednesday, May 04 2011 at 12:15AM ET
Great comment Ron, until CPA's recognize we are not selling time but a valueable serivce they will continue to be under paid.


Eric Rigby

Posted by Eric R | Monday, May 02 2011 at 11:23AM ET

CPAs don't sell time because no client buys time. Clients buy intellectual capital, results, and value. Nobody cares about the labor pains, they just want to see the baby. Time is not money, time is just time. Bill Gates has just as much time as you and me; the difference is his business model isn't based on "billing time."

Rather than "billing" in arrears, CPAs should be "pricing" upfront, before any work is performed. That is only way to solve all of the issues you discuss. Anything less is dealing with symptoms, not the cause, of billing in arrears.

No client wants to purchase something without knowing the price upfront. No other business on the planet forces customers to do so. CPAs ignore this basic economic law at their peril.

The only solution is to quote a price upfront. And isn't that the best time for the firm to learn that the client doesn't like the price? If they find out afterward, there's nothing they can do, as they have no more leverage. This is the major reason for write-downs, write-offs, and ill-will among clients.

We aren't in business to make money. We are in business to provide a service that is so valuable our clients willingly pay us a profit in recognition of what we do for them. This has nothing at all to do with time, and everything to do with results.

Ron Baker, Founder
VeraSage Institute
Posted by verasage | Monday, May 02 2011 at 10:25AM ET
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