How to manage challenging tax clients
Managing tax clients isn’t always easy. Providing good customer service is essential to growing your tax and accounting practice but, as many professionals have come to realize, dealing with difficult clients can be hard.
Some tax clients may be too demanding, disrespectful to staff, or fail to adhere to firm policies and procedures. The problem is that challenging or tough clients can hinder a firm’s job performance and profitability, and they can negatively impact staff morale. That’s why, when it comes to existing and prospective tax clients, taking a quality-over-quantity approach is important.
To help firms learn how to deal with difficult clients, we’ll take a closer look at the behaviors of tax clients, the importance of managing expectations, and, if necessary, even firing clients.
Behaviors of challenging tax clients
The customer is always right. Or are they? The short answer is: no. Differing opinions and personality traits will always come into play when dealing with tax clients, and knowing how to deal with difficult people is critical. There are, however, boundaries that shouldn’t be crossed and limits to what firm staff should have to endure.
There are behaviors that are indicative of a challenging client and knowing the red flags to watch for can be helpful. Some common behaviors that can be associated with challenging tax clients include:
- They consistently try to get “something for nothing”. These are the clients who will consistently want services that extend beyond the scope of service, but they don’t want to pay extra for those services.
- They refuse to follow firm policies and procedures. These clients continually make exceptions to your firm’s policies and procedures and can be a drain on staff time and resources. For instance, these could be tax clients who insist on using email instead of the firm’s secure portal to submit sensitive documents, or business owners who refuse to embrace a firm’s tech stack and insist on using their own software.
- They don’t view you as a partner. As a tax and accounting professional, you are looking to help guide your tax clients. The strongest client relationships develop when your clients understand this and view you as their partner and trusted advisor. Those tax clients who don’t are less likely to respect your professional advice, follow policies and procedures, and, in some cases, may even talk down to or belittle firm staff.
Manage tax client expectations
One of the most effective ways to deal with challenging tax clients is to manage client expectations. This means opening the doors of communication and clearly defining upfront the services to be provided. There are a couple of reasons why this is important.
For starters, it is human nature for people to feel less anxious when they are informed. Therefore, when new legislation is passed, for example, proactively communicating with your tax clients (i.e., emailed newsletters, webinars, etc.) on the potential impacts and informing them that you are on top of the developments can preemptively answer questions they may have and ease their anxiety.
It is also important to clearly define upfront the scope of service in an engagement letter. This can go a long way in avoiding miscommunication and potential disputes in the future.
Matters that should be included in an engagement letter include:
- The purpose and objectives of the engagement;
- Scope of the engagement;
- Reports and other anticipated outputs of the engagement; and
- Fees and billing arrangements.
Firing a tax client
Firms that continue to serve challenging clients just for the sake of the relationship should think again. These are tax clients who have become too much work for the amount of revenue they generate and, in these instances, it may be best to cut ties with the client.
Consider this: The time and energy you spend dealing with challenging clients is time that can be spent bringing in new, more profitable clients. Staff will also feel less stressed.
Firms may want to start by classifying clients. Client classification can be a way to identify those tax clients who should pay more for the extra attention and work they require. It can also be a way for firms to weed out challenging clients and sever ties.
Questions to ask include:
- How much time does the tax client spend with the firm?
- How many services do they currently utilize?
- Do they pay the bills on time?
- Do they dispute or argue over fees?
- Does the firm make a good recovery on the fees?
- Can the firm add further value to its business?
Conclusion
Managing tax client expectations and clearly outlining upfront the terms and policies of the engagement can go a long way when managing challenging clients. However, if there’s a tax client who becomes a source of too much stress on staff, and a drain on time and resources, then letting go of that client may be the only option. To read more about accounting firm problems, see what the top issues are for 2023.
