Art of Accounting: Preparing proposals

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Frequently we are asked to prepare a formal proposal. This is usually done when the client or prospect is considering multiple firms and the decision will either be made by a board of directors or when the person making the decision feels the need to tangibly back up their decision. Sometimes the request is made to show that multiple firms were solicited when management wants to retain the current accounting firm. Whatever the reason, it is usually a good practice to comply and to comply with a complete and impressive proposal.

This column was prompted by a colleague’s request asking me how she could go about preparing a proposal. For starters, the proposal should include a detailed description of the requested services and scope and the client’s anticipated role, biographies emphasizing the experience of the people that will be working on the engagement, experience in the client’s industry, a timetable for the deliverable, where the work would be performed (usually on the client’s premises), the range of your rates for each level that will work on the team (if it is a time-based fee), and payment terms.

The following are some specifics you can consider including in the proposal:

1. The proposal is about filling the need the client has; it is not about you, even though you will need to provide a lot of information about your partners, staff and firm.

2. You need to convey the value that will be received by engaging you.

3. The proposal should clearly state what the clients said they want, being careful to limit it to what you are proposing.

4. Provide the scope and responsibilities of you and the client for meeting deadlines and a timeline. Include a comment that you always meet deadlines and rely on the cooperation of the client for this.

5. Include a proposed fee for the specific services covered. If possible, provide fixed fees. If that cannot be done, then try to break the project into separate parts with a fixed price for each part. If that cannot be done, then quote your rates but realize that once you set a range, you’ve set a “fixed” fee somewhat in the middle of the range.

6. Ask for a retainer and explain your progress billing policy.

7. It is important to include wording that the fixed fees are predicated on the services described. If they're not fully what the client understands them to be, they are welcome to make any changes, suggestions or additions, and you anticipate the full collaboration of the client’s staff. Mention that any out-of-scope work would be identified and quoted before you will proceed on providing those services.

8. Include descriptions of current clients in their industry or for the specialized services they want and get endorsements that you could include in the proposal.

9. Include photos and brief information about the team members who will perform the services for them.

10. I believe an individual should sign the proposal and not the “firm.”

11. Offer a free consultation for every new venture or activity they are contemplating, with no limit to the number of consultations (these are really sales pitches). Afterwards, if necessary, fixed fees (or hourly rates) if applicable will be quoted.

12. Make sure the proposal is proofed. You should have a partner who will not be part of the team review it before sending to the client.

Keep in mind that your proposal will be compared to others, and you will need to include some things that are memorable, stand out and provide the reason why you should be engaged.

Be aware that the proposal is not an engagement letter so it will not contain the typical caveats and internal file retention policies or arbitration processes to collect unpaid fees.

Use the above as a guide. Good luck with this process.

Do not hesitate to contact me at emendlowitz@withum.com with your practice management questions.

Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People List. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. Ed is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 743-4582 or emendlowitz@withum.com.

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