Increase your fees, reduce your client’s stress

Clients would benefit from having a customized financial manual to follow.

If you provide accounting services to small businesses, including audits, reviews and notice to readers, you are probably used to seeing financial records in a state of disarray.

When you arrive to do the year-end, you have to start by cleaning up the mess.

Does this sound familiar? The bank doesn’t reconcile. The payroll remittances don’t match the CPP, EI and income tax GL accounts. Accounts receivables that have been outstanding for years are still listed on the aging report. The HST account is a disaster — the client has recorded some ITCs correctly, some incorrectly and some haven’t been recorded at all. If the client uses the Quick Method or the Simplified Method, the client can’t do the work itself, it always needs your help, and it’s usually during your busiest period. Oh, and the adjusting entries for last year have not been made yet.

Needless to say, the time it takes to correct the books before you can do the year-end often means you have a writeoff on the client billing.

While this situation is hard on you, it’s potentially disastrous for your client. Think about it. Because the client’s records are inaccurate, it never really knows where it stands financially at any point during the year. Is it profitable or not? Many don’t know until you figure it out — often months after the year-end.

The client misses deadlines on HST, corporate tax and payroll remittances and incurs nondeductible interest and penalties as a result. Receivables don’t get followed up regularly, resulting in writeoffs of long-outstanding accounts. It pays suppliers late and loses early payment discounts. Such clients also tend to borrow more than they otherwise would because they have no accurate system to track and predict their cash flow.

Many companies that go out of business have one common characteristic — bad financial records.

So what can you do? I have found a possible solution, one that could also make you more money.

It’s the production of a financial policies and procedures manual. Basically, it is a customized financial how-to guide written in plain English that covers all financial issues, including the problem areas just discussed.

And the good news is that you, as the accountant, are in the best position to produce one for your clients. And that means a new source of fees. I know this because my firm has been providing this service to clients for several years.

It also means no more messy year-ends and, more importantly, it means a client that has a good handle on how business is going and therefore can make changes as needed to ensure continued growth and success. And who doesn’t want more successful clients?

Think how the client would benefit from having a customized financial manual to follow each day. Instead of being a slave to the one person in the office who does all the accounting, now others can be involved. This eases the pain of losing a key employee, and the resulting segregation of duties lowers the risk of fraud.

Such a manual is also an excellent training tool for new staff. This means existing employees don’t need to take as much time away from their daily duties to train staff. It also separates the good employees from the rest. If one can’t follow a straightforward manual, then maybe he or she is not the best person for the job.

A manual could also potentially increase the business’s value to new owners. Because all financial areas are documented, the business could truly become turnkey. The new owners would simply ensure the staff follows how things are currently done — it’s all in the manual.

And if you have more than one client in a particular industry, once you prepare a manual for one client, you have a basic template for others. This is the key to greater efficiency and profit.

I recommend you prepare a full-colour printed manual contained in a loose-leaf binder to allow updates, as well as a Microsoft Word electronic copy for use on a website or intranet.

So there you have it: a potential new service you can offer to a client that will make your year-ends more efficient, reduce your client’s stress and help it run a more profitable business.

About the Author

David Trahair


David Trahair, CPA, CA, is a personal finance author and speaker (www.trahair.com). His latest book is The Procrastinator’s Guide to Retirement.

comments powered by Disqus

Highlights

Update your knowledge and strengthen your network at this must-attend conference covering the most important issues and trends affecting audit committee members.

It’s probable that someone you know is deep in debt. If you are observant, you might see one of these seven signs.