Have You Fired a Client Lately?

Why you can’t afford that difficult client — and what to do about it.

by Rick Telberg
At Large

Invoices that are paid late or not at all, phone calls on Christmas day to calculate year-end numbers, unrealistic demands and even fraud… Most every accountant has their own story of clients who are more than just difficult.

Let’s face it. We love our clients. That’s why most accountants are in the business. But some clients are just, honestly, nightmares. Accountants have a name for them. They are the clients from hell.

Difficult clients are a problem to firms of all sizes. To be sure, small firms can be most vulnerable to one or two difficult clients. Larger firms generally have procedures in place to manage client acceptance and grading. But I’m also seeing firms of all sizes that are tightening up their client acceptance processes and systematically shedding their “D” clients so they can focus on their “A” clients.

RELATED (Updated Noon, Nov. 25, due to popular demand for the how-to and what-to-do):

What’s YOUR best tip for firing a client? Tell us in comments here…

Spotting a problem client may not be easy at first glance but when they become a source of nothing but anguish and stress it is time to reevaluate the relationship. In fact, it’s sometimes professional protocol.

“It was a nightmare. Definitely not worth the fees even if they were 10 times the amount I eventually ended up collecting,” said Bryan Kisiel of Connellsville, Pa., when asked about his “client from hell.”

Unfortunately, Kisiel’s experience is all too common. In fact, our research indicates that 93% percent of 153 public accountants surveyed have at least “a few” clients they would like to fire.

The tough part, however, is actually finding the strength or the best way to sever such dysfunctional relationships. Still, 9 in 10 accountants have terminated a client and many have done so at least once in the last year.

Often, the grief just isn’t worth the money. In fact, too many accountants probably worry too much about losing and replacing the revenue than the more intangible costs of stress, aggravation and distraction of maintaining problematic clients. Savvy practitioners focus instead on the peace of mind that can come from simplifying their professional lives.

“Do not focus on the lost revenue from firing a bad customer,” advises accountant Wayne Davies. “Focus on 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,” Davies says. “Do you really make money on them when you factor in the value of your time?”

That’s the situation Jon Herberg of Billings, Mont., found himself in with a small business client from hell: “The wife is a woman from hell. The biggest complaint I have is that she never hears what I have to say.  Whether it is tax planning or any conversation, we seem to be unable to communicate.  I take good notes at our meetings and there has not been a time when something is misunderstood and she has not been afraid to tell me I screwed up because, no matter what I have in my notes, she could not be wrong. I dread every meeting with her. During tax season, I know I should fire her but hate to do so when they have not had time to find another accountant.  The rest of the year I keep hoping she has changed and think I need to try harder to get along.  Their annual fees come to less than $400 a year, not a big account.”

“I once had a client that was a very mean old lady,” said Marc C. Phelps, CPA, of El Segundo, Calif., with no offense meant to the old or the lady-like – just the very mean. “She used to yell at her accountants for every little mistake and any misunderstanding.  Picture a little old 82-year-old lady that speaks like a sailor.” (And no offense to sailors.)

And then there’s the client who just didn’t understand personal boundaries or even common courtesy. “He was ‘handsie’ with his bookkeeping staff in front of me, discussed his extra marital affairs around me and bragged about sleeping with his son’s girlfriend,” saidTeri Ann Kruse of Portland, Ore. “He wouldn’t give me signed copies of documents and I had a hard time getting him to sign engagement letters.”  They parted ways in less than six months, but, Kruse continued, “My client from hell had residuals.”

“After getting rid of him,” Kruse said, “his records were subpoenaed and I was visited twice by IRS agents and attorneys from the U.S Antitrust Division of the Department of Justice.”

Sherry Craighill, of Oakhill, Va., described her client from hell as a “type A on steroids.”

“The narcissistic micro-managing ‘I can do your job better, faster, smarter than you,’ ” Craighill explained. They “demanded constant and immediate attention by phone, email and frequent unscheduled visits.”

A problem client may not be easy to spot at first glance. But here are a few types of clients that are sure to cause trouble:

I’m sure you’ve met at least one of those characters.

WHAT’S YOUR “CLIENT FROM HELL” STORY? Sound off here.

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

Bookmark and Share

Posted at November 24, 2008
Filed Under BSG [CPA TRENDLINES] | 6 Comments

Comments

6 Responses to “Have You Fired a Client Lately?”

  1. Jim Wilson on November 24th, 2008 5:11 pm

    The email from AICPA announcing the article was titled “How to Fire a Client”. The first line of the article references “what to do about it”. Neither was part of the story itself. The story merely presented others’ stories about their worst clients. While it may be amusing, it’s not the alleged focus of the story. Had the story been more accurately titled or introduced, I probably wouldn’t have bothered with it. As it stands, now I’m annoyed that I wasted a few minutes on it. It was neither instructive nor constructive, just a bunch of accountants “sounding off” and pointing at the elephant in the room, no one with fresh ideas or tips on “how to fire clients”

    Jim

  2. Shane Eloe on November 24th, 2008 9:46 pm

    This post is an excellent observation regarding focusing your attention on the clients that are valuable rather than losing sleep over those that are not.

    My question is with regards to a partnership where there is an uneven distribution of “D” clients. Let’s say on a whole firm evaluation, we need to trim 20% of Partner A’s clients, but only 5% of Partner B’s clients. Furthermore, Partner B has potential “A” clients in the pipeline that he has not been proposing to because of a lack of firm resources that will now be available by retiring some of Partner A’s poor clients.

    The firm as a whole becomes much more profitable, happy and effective by digging out the “D” client cancer, but the compensation structure has now shifted much more money from Partner A to Partner B.

    Furthermore, in most instances this shift in compensation can be anticipated by Partner A and the course of action eliminating Partner A’s “D” clients does not happen, due to Partner A’s subversive actions (after all, he is not concerned as much with total firm profitability as he is his own compensation).

    Does a situation like this happen often in practice? What is a good way to address this issue and other agency issues between the firm and its partners?

  3. name withheld on November 25th, 2008 11:55 am

    Good subject. We accountants, by tolerating these rascals, only have ourselves to blame because they believe they always have an alternative, thus, intimidate and, in effect, extort well meaning accountants, who falsely believe they are still further ahead by tolerating their abuse.

    One great idea I’ve implemented is to keeping increasing the bill of the clients I don’t like until I like them again. Those incorrigible ones, those hateful and defective specimens of humanity who hate even themselves, I consign to my worthy competitors.

    Ultimately, the only strategy for upgrading the level of clientele is to ensure you, yourself, are worthy of better clients by a brutally honest assessment and upgrading of your own attributes, and to ensure your marketing is working at peak effectiveness to keep the new clients rolling in the door to replace the malcontents. Remember, the old adage is still applicable: birds of a feather flock together. Many times, we accountants get the clients we deserve.

  4. Michael J. Molder, JD, CPA/CFF, CFE, CVA on November 25th, 2008 11:53 am

    While I could relate to the war stories from folks about their clients from Hell, you never explained how to extricate yourself from them.

    I was hoping for some insight on dealing with these types of situations.

    How do you get them to decide to move on without offending and, thereby, creating an “anti-referral” source?

    What do you tell the next guy when he or she contacts the predecessor accountant?

    How do you convince the partners that these clients are so poisonous that they need to go; after all the rest of the firm enjoys the benefits of the fees, but not necessarily the aggravation of the relationship?

    That’s the article I want to read.

  5. John Dagnon on November 25th, 2008 12:00 pm

    How often does a client question the Dr.’s bill or the lawyer’s bill?

    Do you go into your dry cleaner and say that you are only going to pay what you think it is worth? No but they do with accountants.

    Why? Because we allow ourselves not to be treated as professionals. And out fellow accountants buy into it. We are our own worse enemy. As I tell my students, CPAs are the only professionals who love to eat their own.

  6. Steve Carter on November 25th, 2008 12:03 pm

    Did I miss something? Where is the what to do?

    For me, the hardest part is how to say goodbye.

Leave a Reply