Should accountants be charging for PPP services?
Yes, the next six months will be a busy time for accountants. Not only will we be catching up with tax filings but many of our clients will be needing our help to file applications for forgiveness of their Paycheck Protection Program loans (as noted in this recent Accounting Today article).
But here’s a question: If you’re helping your clients with PPP work, are you charging them? If you are, you’re not alone. Many of the accountants that I speak to anecdotally are sending invoices for this work. But a few aren’t. It’s certainly not unethical to charge, and many in the profession justifiably believe that they’re providing an important, billable service. I don’t disagree. But is billing your client for these services really in the best interests of your firm — and your clients — in the long run? I’m not so sure it is. Why?
For starters, I certainly realize that instead of just turning the whole loan forgiveness program into a grant program (a move that would provide enormous savings, as I wrote here) the Small Business Administration, along with the Treasury, has turned the entire process into a bureaucratic, complex undertaking, complete with lengthy, difficult-to-follow documents (49 frequently asked questions and counting!) as well as conflicting and incomplete information. Many business owners aren’t used to this type of financial reporting and need help with the process, so naturally they’re turning to us.
But here's the thing: The PPP was intended to help small businesses affected by the COVID-19 outbreak, and not to line the pockets of their professional advisors. One CPA I know complained that, with the release of the Treasury's EZ Application, her fees would be less because it would be easier for a client to submit their data. I think she’s missing the boat. Millions of small businesses have suffered enormously as a result of the pandemic. Charging additional fees to help them get money back from the government seems to me like adding salt to their wounds.
We're also exposing ourselves to potentially bad media reports about our practices. So far, it's been the banks who've been on the receiving end of negative public relations thanks to their mishandling of the loan applications at the start, followed by allegations of customer favoritism and now the increasing awareness of the hundreds of millions of dollars in fees they've earned from the government as a result. Who's next for the media to attack?
Well, why not all those financial professionals who also profited from the PPP program? These types of articles seem inevitable. They will be politically motivated, particularly as we head deeper into the election season and people are looking for ways to attack or defend any “villain” — including the accounting profession — who makes a good story. Do you want your firm to be labelled as a greedy profiteer, one that sticks it to those poor, needy, mom-and-pops in their time of need? Shame on you!
Finally, charging your clients to help them with their PPP forgiveness applications may hurt your firm’s relations with that client more than help them. Sure, you want to be reimbursed for the time your staff is spending. But, by taking this money, you’re also potentially ruffling feathers. Trust me when I say that your clients — beset by many difficult challenges in these unprecedented times — aren't going to be thrilled when they also receive a bill from you for services they had no choice but to accept. Charging them could potentially be seen as a very selfish act.
By not charging a client (and making sure the client knows it!) you're not only unselfish, but you’re demonstrating your commitment to your relationship and your concern for their long-term viability. You're demonstrating that you care by putting your money where your mouth is and absorbing some additional costs … just like they are. That type of skin in the game will likely go a long way once things eventually turn back around.
If you're still on the fence about charging, how about a compromise? The government is more closely scrutinizing companies that borrow more than $2 million, so maybe your firm should institute a similar cutoff. That way you can charge your larger customers when possible, yet waive fees for your smaller ones. It's likely that you'll be spending more time with your bigger clients anyway, and being those larger companies will be more apt to understand the reasonableness of these charges, as opposed to the restaurant owner that’s barely surviving.
Regardless, it's important to take a step back and seriously consider your billing policy for these PPP services. Knowing what we know about the government, there will be more rules and bureaucracy to come, and even another stimulus round. But taken together, this is still just a one-off event and will (very hopefully) not occur again for a long time. So maybe the best way to leverage this event isn't by collecting short-term cash from your clients but by generating long-term goodwill.