Accountant Fees Question

Pinkjo Registered Posts: 88 💫 🐯 💫
I have been asked by my boss to try and negotiate reduced fees with our accountants - currently £7200 for the year. Her query is why is she paying so much when I do most of the work. Now, I do all the accounts work throughout the year, then at then end of the year I forward to the accountants Sage back-up and reconciled bank statements, completed VAT returns etc - they produce the final accounts from the accounts submitted to them (and don't make any year end adjustments - I do that) and submit them to Companies House.

I know I'm a long way off being an accountant, so don't want to insult them by saying "I do all the work" obviously there is masses they do that I don't know about, however my incentive is if I can get a significant reduction I will get a payrise!!

Does anyone have any ideas how I can word my email/telephone conversation with them without upsetting them?



  • Gianni
    Gianni Registered Posts: 99 💫 🐯 💫
    Do they perform an audit?

    If not without knowing the full facts that is ridiculously expensive. I would expect fees to be a max of £1500 for year end accounts plus tax computations. If inventory isn't involved I'd say it'd be even less.

    Does your boss speak to the accountants regularly? Sometimes fees are higher because they include the constant verbal conversations directors often want to engage in. Do the accountants do anything else? For example offer specific tax advice (personal & business), P11D's, etc.

    It may be worth giving a couple of other accountancy firms a call, explaining the requirement and asking for an estimate. This will give you a quantitative basis if your accountants disagree that the fee should be reduced.
  • Pinkjo
    Pinkjo Registered Posts: 88 💫 🐯 💫
    Thanks for the replies. No they do not perform an audit, or have anything to do with payroll, P11d's etc

    They do personal tax returns for the directors and their personal rental accounts, as well as registered office facilities. These are itemised separately on the bill. The biggest charge is £5800 for drafting financial statements and corporation tax compliance. Should I ask for a breakdown of this?

    I think my boss wants to stay with them, but would like them to justify or reduce their fees. So how do I go about negotiating with them, without them thinking "get her with her AAT Intermediate head on - thinks she knows it all now" - or shouldn't I care?
  • accountant
    accountant Registered Posts: 10 Regular contributor ⭐ 😼 ⭐
    To take your last point first - no you shouldn't care. The accountant is a supplier like any other and you are entitled to query the price they are charging for their service. I don't agree with Gianni that the price for year end accounts plus tax computations should be no more than £1,500 and probably less, it depends on many factors not least the size and complexity of your business, and one can't make a blanket statement that a fee should never exceed a given figure. Furthermore I would expect to pay a Price Waterhouse Coopers far more for drafting financial statements and corporation tax compliance than I would a local single office firm even though the service is essentially the same.

    Having said all that I do agree that on the face of it £5,800 does seem excessive and you should certainly ask them to justify the amount. Did your company have to be audited once upon a time and did the accountants annual fee reduce when that requirement ceased? In my experience it was noticeable that even though an audit was no longer mandatory somehow the annual fee managed to remain the same and for some unaccountable reason few people questioned it, they just carried on paying it as they always had done.

    In summary then yes ask politely for a breakdown of the £5,800, the time involved and the relative charge out rates. It is your right as the customer to know what you're being charged for. If the fee is justifiable they won't mind; and if it isn't your boss might not feel so kindly toward them if she finds out she's been ripped off. If having obtained all the facts you feel a fee reduction is justified then don't be afraid to tell them what you consider a fair price to be.

    However if you are querying their latest bill you are in a sense shutting the stable door after the horse has bolted in that they've already done the work and submitted the invoice so it's a bit like asking someone to paint your house and then negotiating the price after they've finished. Negotiating a fee in advance for the year every year would be a good practice to get into and would put an end to this sort of problem since you would know in advance what you are going to be paying for the year. (It helps enormously with budgetting too).

    One final word of caution if you do consider changing accountants. The old adage "you get what you pay for" is as true with accountancy services as it is with anything else and as a member in practice myself I know only too well that there's always somebody out there who claims they can do it cheaper; but usually that means not as well too.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    accountant wrote: »
    One final word of caution if you do consider changing accountants. The old adage "you get what you pay for" is as true with accountancy services as it is with anything else and as a member in practice myself I know only too well that there's always somebody out there who claims they can do it cheaper; but usually that means not as well too.

    True, but in this case, you can get very good quality for significantly less.
    We don't know the full facts of what they do, so we can't really say, but if all the bookkeeping is done then it really shouldn't be lots of work for them.
    Ask them if the bookkeeping is up to scratch (I'm not suggesting it isn't, but would be interesting to see what they say, as this is usually what ups a fee) and if they have to make many adjustments, and if there is anything you can do.

    In my experience, though, if the books are mostly done, doing a few more bits won't really reduce the fee that much.

    Personally I would say look elsewhere, not with a view to definitely changing, but to see what other firms cam offer, but ultimately it's up to the boss.
  • Gianni
    Gianni Registered Posts: 99 💫 🐯 💫
    The reason I suggested £1500 was because this is around the fee that has been quoted by the accountants (a fairly large firm in the area) at the place I work. We are just under the audit requirements and the business is fairly complex although previous we have been audited by this firm which is probably taken into consideration fee wise.

    I think you've come up with the right plan though, ask for a breakdown of their fee as your first step and see what response you get; approach it as an information gathering exercise to present to your boss as ultimately any decision is hers. Your level of qualification or experience has nothing to do with them and therefore don’t worry if they think “you are on your high horse” – you are the customer and acting on behalf of your boss.

    The reason I said contact other accountancy firms was not to move but more to get a flavour of market rates. I agree with 'Accountant' in that, to ask for a reduction now is difficult but if a price was not agreed to begin with I believe this is a failing on both parts and therefore a solution should be sought.
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    My two penneth..

    If you are 'just under the audit threshold' then you are obviously a sizeable company, albeit 'small' in the eyes of the Companies Act. With companies of your size comes greater risk of error particularly in terms of tax but also in terms of disclosure. Making sure the tax position is correct, as well as advising on any planning, can take a lot of time where there are a considerable number of transactions to review.

    My largest client turns over less than £2m per annum and I think I am pretty cheap at £3.5k and, yes, they have a very good bookkeeper who does all the reconciliations, VAT and payroll. My standard rate for a 'one-man band' company is £1,200 per annum including reconciliations, VAT and payroll yet I still feel I make more profit on those smaller companies than I ever do on the larger one.

    Personally, I wouldn't even take on a client close to the audit threshold as there are a whole host of issues to deal with and I would not have the resources to offer a good service.

    I am sure you can negotiate a reduction but I do not think you are being ripped off. £1,500 is just pie in the sky and is a quote I am sure that company will live to regret.
  • Pinkjo
    Pinkjo Registered Posts: 88 💫 🐯 💫
    Our turnover is about £2million a year, I thought the threshold for audit was about £5.6 million?

    Anyway - your advice has all been great - I don't think we are being "ripped off" just overcharged a little :lol:

    I have sent an email to them asking for a breakdown of the £5800 charge, let's see where we go from here.:001_unsure:
  • Toffeemadblue
    Toffeemadblue Registered Posts: 102 🎆 🐘 🎆
    We are a single site company with over £20 million turnover and stock over £2million, we produce accurate monthly management accounts and everything is done for our auditors. They still have to attend the stock check and the AGM and up to three staff spend around 6 days on site. For all this we paid last year a very competitive £10,700. My experience has always been regular benchmarking is worthwhile and being prepared to change if necessary.
  • Pinkjo
    Pinkjo Registered Posts: 88 💫 🐯 💫
    Just thought I'd update - I've managed to get the accountants to drop £2000 off the bill :thumbup1: Thanks for your advice and thoughts :thumbup:
  • sarahwilson
    sarahwilson Registered Posts: 567
    Well done you, I would be half tempted to move anyway but I am rather childish if people have been overcharging me!!! Good for you Pinkjo:thumbup:
  • farmergiles
    farmergiles Registered Posts: 1,693
    I would look for a new accountant straight away. If they can chop the fee by £2k, how long have they been overcharging for????
  • qwerty
    qwerty Registered Posts: 82 💫 🐯 💫
    Well done on getting the fee reduced, but I don't agree with people saying change accountants for over-charging (well not yet anyway!).

    Did they agree to reduce the fee without changing the way the job was done e.g. will they still be sending the same staff, for the same length of time etc. or do they expect you to do more work so that they don't have to?

    They may also have cut the fee becuase they may replace one of the staff who has previously worked on completing your accounts with a more junior member of staff with a lower charge out rate?

    Also, is this a permanent reduced rate, or just a one-off? I have known accountants to reduce the rate for one year when a client asks in order to keep hold of the client, and then the fee goes back to the original level after that year.

    Anyway, hope you boss rewards you for getting their fee reduced :thumbup:
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