Four Reasons to Fire a Client Today

924215_crazy_lady.jpgTurn problems into profits.

by Rick Telberg

Every business has problem clients, but not everyone subscribes to the “customer is always right” philosophy. In fact, some businesses will actually fire such clients and report being happier and more successful for it.

CPA firms are often told to be strategic in prospecting for and selecting clients to help dodge such dysfunctional relationships-even when money is tight and all clients look like a gem. That’s easier said than done, of course.

Experience shows that a difficult client can be more problem than profit.

Author and accountant Wayne M. Davies suggests the following: “Do not focus on the lost revenue that results from firing a bad customer. Focus on the resulting reduced stress and the simple fact that you’ll feel so much better knowing that you won’t have to deal with this jerk any more… You end up spending so much time and energy putting out the fires they cause, do you really make money on them when you factor in the value of your time?”

A problem client may not be easy to spot at first glance. But there are a few signs that can quickly help determine when it’s time to cut the cord:

  1. The client is very quick to chisel down the price and, upon receiving the invoice, questions every detail. And, to top it off, he or she never pays the invoice on time.
  2. The client is very demanding and plagues you with constant e-mails, phone calls and office visits. Perhaps he or she even invades your personal time with after-hours or weekend phone calls.
  3. The client is a chronic complainer and perhaps even exhibits aggressive or abusive behavior.
  4. The client is always late to meetings, cancels meetings at the last minute or even fails to show up at all.

Deciding to fire a client is one thing but actually doing it is another. One of the biggest hurdles can be figuring out what to say. It might help to sit down beforehand and write out a couple of different scripts. It may even help to stand in front of a mirror and rehearse what to say. When the time has come to confront the client, it is important to remain calm and polite.

Keep it short. Keep it businesslike. Don’t stray from the script or the task at hand. You don’t want to say too much or get off course.

Raise your rates, even if only for that particular client. Because, as a general rule, the client who pays the least will expect the most, raising your rates will likely prompt the bargain shopper to move on.

If a client wants your home phone number and calls you after hours or on weekends, that’s a sign this is a problem client. A more graceful way out of such a predicament is to not field any calls from this client-unless it’s a true emergency-when you are not available.

If you do happen to end up in a conversation with this person outside of normal business hours, stop the client firmly but politely and suggest picking up the call the next business day, then do so. If this continues to be a problem, let the client know you are hiking up your rates.

These are just a few suggestions that may prove helpful, but the ideal scenario is, of course, to avoid such situations in the first place.

That’s why you need a crystal-clear profile of your target client. Then be ruthless about accepting no less.

RELATED: 4 Steps to Firing a Client

COMMENTS: Questions, rants or raves? Send comments to Rick Telberg.


Copyright © 2008 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.

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Posted at February 25, 2008
Filed Under BSG [CPA TRENDLINES] | 7 Comments

Comments

7 Responses to “Four Reasons to Fire a Client Today”

  1. Robert Gold on February 25th, 2008 5:44 pm

    Please edit the archives page to be http://BusinessCast.ca/archives (the period in the first post messes up some browsers.

    Thanks. =R=

  2. Bill Sheridan on February 25th, 2008 6:26 pm

    Great column, Rick. Did you see the article in CFO Europe magazine called “Keeping Bad Apples?” (We referenced it, along with your column, in a recent post at http://www.CPASuccess.com.) It cites a Wharton School study that implies businesses should actually KEEP bad clients, because it makes competitors less likely to poach their clients. Interesting theory, but I’m not sure I buy it.

  3. Alan Goh Pei Loong on February 26th, 2008 9:28 am

    Firing clients that have 3 attributes:

    ( 1 ) Cost of maintaining clients are more than customer margin for long & short run.

    ( 2 ) Company background is fishy.

    ( 3 ) Directors been blacklisted for certain offence or pending hearing.

    Alan Goh ACMA, UK 1-HE5V
    Chartered Management Accountant

  4. Art Romero on February 26th, 2008 9:28 am

    Excellent points Rick.

    So many of us just do not have the guts to go through with firing that B… S… client.

    Thanks for the article. The advice has been heeded.

    AR

  5. Robert Gold on March 5th, 2008 12:35 pm

    Check this episode of the BusinessCast podcat for a unique perspective: ‘Firing A Client Before You Get Burned’. Show number 45 at http://BusinessCast.ca/archives.

    We’ll get you fired up about firing those bottom-rung clients. Well said, Rick.

    =R=

  6. Robert Gold on March 5th, 2008 12:41 pm

    Ooops! That’s http://BusinessCast.ca/archives – the period in the comment above messed it up.

    =R=

  7. Timothy S. Watson on March 5th, 2008 1:25 pm

    Rick,

    Thanks for doing this survey and article. Not only is this article informative, but it can be used as a client management tool. I am going to promptly send it to all of my bad clients as a means of indicating to them where they stand with my firm!

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