Sack Race: Firing Clients Before Next Season

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You’ve left unanswered voicemails and sent a dozen ignored e-mails. On those blue-moon occasions when they actually keep appointments, you walked these clients through returns line after line, time after time.

Before next tax season begins, how can you pinpoint and fire your worst clients?

If you don’t let bad clients go, you’re not alone. According to a recent survey from the National Society of Accountants, almost two thirds (63.5 percent) of practitioners review and potentially fire problem clients as difficulties occur. Almost one in seven practitioners take these actions once a year – but more than one in 10 never review and fire problem clients.

When you do decide it’s time to say goodbye, who goes? “Ones that are more work than they’re worth,” said Enrolled Agent Allen Beatty at Apple Tax Services, in Jackson, Ohio. “In my opinion, these are not just ones with sloppy records but clients who don’t directly answer my questions [and] who cause doubt in my mind about their data.”

“Some clients simply take up more time to serve than one can reasonably charge for, and those are the ones we sometimes have to let go,” said JeanMarie Hinds, an RTRP at TaxxDog in Appleton, Wis. “We’re a small and very personalized practice, so it’s always a difficult thing to do, but there is a tipping point that depends on the particular client. Sometimes they do refer other clients, however, or bring something else to the relationship that must be weighed.”

‘Gut’ reactions and butterflies

Cheryl Morse, an EA at Wellesley, Mass.-based Emerging Business Partners, has two ways to decide which clients to fire. “First is my gut reaction to seeing their name on my client list,” Morse said. “If I have a physical reaction – headache, pit in stomach – it’s time for them to go. The other is that I keep all message slips and e-mails from clients. I also write on the back of messages the time and date that I returned the call and whether we talked or I left a message, so if a client says I didn’t return their call, I can refer back to the message. If it looks like I just released butterflies when I open their file because of all the messages, it’s time to evaluate the cost and benefit of dealing with that client.”

“There’s a difference between the client who keeps in touch and the client who wants you to fill out their FAFSA line by line over the phone for free,” she added.

“The other sort of client that we terminate is the result of situations where we learn or experience that they are less than honest,” added TaxxDog’s Hinds.

Making a list

“Never an easy process,” said Kathleen Fitzpatrick, owner of Padgett Business Services in Princeton, N.J., of firing. “We appreciate our clients and develop strong working and many times personal relationships with them.” But, she added, successful practices best divide clients into three categories:

A clients: Strong working relationship, highest profitability, frequent interaction with them monthly or quarterly; they follow the agreed process of record-keeping and supporting documentation and are timely in providing information and addressing questions. “All of us would love 100 percent of our clients in this bucket,” Fitzpatrick added.

B clients: See them less often, such as just at tax season; still profitable; easy to do business with; and follow established agreements and timelines.

C clients: The lowest-profit clients on whom you spend significantly more time due to poor record-keeping or who call regularly about topics already discussed; don’t pay their bills on time and not easy to do business with. All attempts to work with them to come up with a better process of interacting and get paid fail.

Andrew Piernock of Philadelphia-based Piernock Accounting and Tax Services also has clear criteria for firing. “Those who are constantly late, for whom not all info is there but who expect their return yesterday and those whose return is not worth the fee I charge,” he said, adding that he’s sending letters to these clients stating that “I am limiting my tax service and can no longer service them.”

When and how

“Firing clients for me is pretty much an ongoing process,” said John Stancil, a CPA in Lakeland, Fla. “I continually evaluate each client and whether they’re worth retaining.”

“If I choose to fire a client, I simply tell them that I feel that I can’t continue to service their needs and that they might be better off finding another preparer,” Stancil said. “When the client is a fairly decent client but takes up a lot of time with questions, extra help and so forth, I tell them that the preparation of the return includes only a limited amount of consultation and that additional questions or consultations will be charged at a certain rate. That way, I at least make the client profitable to me.”

“As to how you fire clients, I’d always give them another accountant to use,” Fitzpatrick said. “I’d tell them my practice has grown and I can’t maintain my current client base. To ensure they get the best possible service for them, I’d give them the name of an accountant I’ve already pre-agreed would get these clients. This may be a person just building their practice who may have more time to focus on this client.”


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