Setting client expectations upfront boosts cash flow

Tim and Dan are Directors at CATS Accountants and founders of the Two Drunk Accountants podcast which aims to dispel the myths of running a small business. The CATS team’s youthful edge delivers enthusiasm, up to date knowledge, and above all an innovative approach when it comes to working with small businesses across all industries to help them realise their full potential.

CATS Accountants
Tim Garth and Dan Osborne, Directors

"Ignition is game-changing for our cash flow as a business – and our clients’ cash flow.”

- Tim Garth, Director, CATS Accountants

The challenge: managing client expectations around scope of work and fees

“In the past, when we’ve surprised clients with our fees, it often resulted in lost clients… and you feel bad as the client doesn’t see the value in what you’ve done.”

Tim Garth and Dan Osborne went from working together at accounting firm CATS to now co-owning the business.

One of the challenges they faced early on was placing an appropriate value on the limited time they had, which led to some awkward conversations.

“It can be particularly awkward when doing an initial estimate of fees. With new clients coming in, you sometimes have no idea what everything looks like and how long it will take, until you really get under their hood. ” says Dan.

“There was this one job that essentially doubled from what we had originally estimated. That was a particularly awkward conversation to tell them that the estimate we gave was completely wrong and that it was actually going to cost a lot more. ”

Dan also says having the awkward conversation early with clients on pricing is important to set expectations about how much their services cost versus how much clients think it should cost.

“Take for example when completing an end of financial year tax return, a new client might have an expectation that it’s $300, but really it’s around $3,000 of work. Having that awkward conversation upfront stops a much more awkward conversation in two months’ time, when you send them a bill for $3,000.”

Tim agreed that underquoting or not communicating early on led to awkward client situations later on. “The most awkward client conversations I’ve had are when I didn’t have the difficult conversation at the beginning about the likely cost for the service. Or where I undersold the cost for the services.”

Dan says if he could give one piece of advice to other accountants, it would be to embrace the awkward early.

“Clients don’t respond well to surprises. In the times before Ignition, when we surprised clients with our fees it often resulted in lost clients, clients leaving and going to a cheaper accountant. Everyone loses in the end,” says Dan.

The solution: putting an end to awkward conversations with Ignition

Since using Ignition to engage clients and automate billing and payments, Tim says it’s easier for them to have conversations with clients early on about their services and value. The platform also helps to prevent scope creep before it even happens by making it fair and transparent.

“I think awkward situations like clients requesting work that’s out of scope will always happen because as accountants we’re selling our time and experience. But Ignition provides a structure around having that conversation early with clients. If you define what’s included, it’s easier to define what’s NOT included.”

“Prior to Ignition, it wasn’t transparent with clients at all. In the past, it was like we’ll do your tax and if we spend 10 hours on it, we’ll charge you whatever hourly rate. This caused angst for accountants and their clients. Now, you can clearly define your value and put your fee to that.”

Having a clear proposal and automated payments and billing process has also helped to free up their time, and revolutionised cash flow for CATS, Tim highlighted.

“Having the proposal signed off really frees up our relationship to work together. We can forget about the billing side of things. Ignition is game-changing for our cash flow as a business – and our clients’ cash flow.”

State of client engagement

With unrecovered out of scope work costing accounting and bookkeeping professionals over $100k per year on average, Australian firms are leaving money on the table. Having or avoiding awkward client conversations, whether about scope creep or late payments, is a part of everyday life – but it doesn’t have to be. 

Register for our State of client engagement webinar on Wednesday 21 September 2022 at 11am AEST, featuring Dan Osborne from CATS Accountants.

Hear from our expert panel about Ignition’s latest research insights on the cost of avoiding awkward situations, and the tools and strategies your firm can use to put an end to these.

Register for the webinar
Ignition’s first ‘State of client engagement’ report explores the impact that delaying awkward client conversations has on accounting professionals and their firms in Australia. Click here to download the report.

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