Problem with Potential Invoice

groundy

We have recently acted for a client with regards to the sale of his business for £1.6 million including property. This has been a long drawn out process over 18 months but in the end we saved our client approx £173,000 in personal tax, company tax and VAT.

We have now come to invoice our client now that the sale has completed and due to the time involved we had a meeting with the client prior to submitting our invoice. The client is not happy with our level of our charges and feels that we think he now has money and therefore we would like a slice for ourselves, however we feel the invoice is reasonable for the amount of specialist work involved and the amount of savings due to our tax planning.

When we mentioned the amount of tax saved, his reply was that was our job. The difficulty is that this is a long standing client who still has another business that we act for and as we have a good working relationship normally we did not draw up any contract or letter of engagement for our work on the sale.

The client has now asked for an additional breakdown of what we have done (one has already been supplied) and is more or less hinting that he would like a reduction in our fee.

Therefore I was wondering if anyone had any help or advice they think they could offer.

Cheers :thumbup:

Dean

Clients' are two a penny - stand your ground!

If you can show the record of time and that time is chargeable you should charge the full amount.

I was told many moons ago; "if you show emotion in business your destine to fail". I guess the moral of that one liner is, if you are happy that you have been straight and the fee due is reasonable for the work carried out then why should you discount it? If you do, the client will have you by the balls and every time you bill him in the future he'll be thinking 'ah, i'll just contest it and it'll be reduced'.

I've had clients like this before and I generally give them a back handed insult - i'll knock off £50-£100 for goodwill!

That may or may not help you. :001_smile:

Regards

Dean

Poodle

groundy wrote: »

The difficulty is that this is a long standing client who still has another business that we act for and as we have a good working relationship normally we did not draw up any contract or letter of engagement for our work on the sale.

Ouch.

But not issuing a LOE should not cause a problem for you even though it is good practice and sets out the respective responsibilities of both parties and is particularly useful in instances of dispute such as this. But as Dean says stick to your guns and let him have the details.

In contract law, he entered into a business relationship with your firm where you to carried out this work for him and as such you would expect reasonable payment from him.

Poodle

Monsoon

groundy wrote: »

The client [...] feels that we think he now has money and therefore we would like a slice for ourselves

I can't stand this attitude! The reason he has more money is because of your tax planning! Grr!!!

I agree with Poodle and Dean, stick to your guns, tax planning at this level is complex stuff. Yes, it's your job to save him the tax - you did so and now he has to pay for it. It's pretty simple really. You aren't a charity, you're running a business and he should respect that.

Good luck, fee disputes are always a pain.

Timmne

faerie9 wrote: »

I can't stand this attitude! The reason he has more money is because of your tax planning! Grr!!!

However (and I'm not at all saying the client's right in this instance BTW) you do have to understand this view sometimes. How many times have you heard an accountant asking what the turnover is of a company they're about to quote for?

The turnover of my company is just under £10m (a manufacturing company, not accountancy practice!) and we issue about half the number of invoices (and generally have a lot less paperwork) for example, than one of my old £60k pa t/o clients.

I have met a number of accountants in the last few years who definitely do see rich clients as pots of gold and will bill them for anything they can get away with.

(although doesn't help with the original question!)

AdamR

Timmne wrote: »

However (and I'm not at all saying the client's right in this instance BTW) you do have to understand this view sometimes. How many times have you heard an accountant asking what the turnover is of a company they're about to quote for?

My firm always asks for turnover before giving a quote...

Monsoon

Timmne wrote: »

However (and I'm not at all saying the client's right in this instance BTW) you do have to understand this view sometimes. How many times have you heard an accountant asking what the turnover is of a company they're about to quote for?

The turnover of my company is just under £10m (a manufacturing company, not accountancy practice!) and we issue about half the number of invoices (and generally have a lot less paperwork) for example, than one of my old £60k pa t/o clients.

I have met a number of accountants in the last few years who definitely do see rich clients as pots of gold and will bill them for anything they can get away with.

(although doesn't help with the original question!)

I do see your point and I get irritated when I see accountants doing this.
I am strongly opposed to pricing based on turnover. Pricing on turnover is inaccurate and greedy. I price based on work involved, and not how rich the client is and thus "whatever I can get away with."

Turnover could be £1m with 5 invoices and a smattering of expenses, or it could be £30k made up of £20 per sale with a nightmare of paperwork, and therefore has nothing to do with the amount of work involved. The only reason for charging someone with more money a higher fee could be the risk involved because the sums involved are much larger but the fee should still be representative of the work and skill involved in completing it.

Sorry, gone off topic!

deanshepherd

I think the size of the company has quite a significant impact, regardless of the number of transactions.

Aside from the greater risk of working with larger numbers, the issues facing larger clients tend to be more complex and the level of skill and knowledge required to service those clients needs a more experienced advisor and perhaps more research work undertaken too.

For example, my largest client is one of the simplest in terms of statutory work because they have an internal bookkeeper who is pretty good so in terms of compliance I have much less to do than one of my more typical clients that do the bookkeeping themselves and cannot reconcile the bank.

However, the queries I receive from those clients are much more complex e.g. international VAT matters, succession planning, employee reward schemes.. and I also have to consider third party reliance on the figures such as minority shareholders, banks, debenture holders.

For the greater level of risk and complexity I charge much higher fees, even though the time spent servicing the client may actually be the same as a smaller, messier client but with much simpler affairs.