plus five steps to follow.
by august j. aquila
price it right: how to value accounting services
accounting firms, like any other professional service providers, may use change orders for several reasons. here are a few key reasons why accounting firms should consider utilizing change orders:
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- scope of work changes: change orders allow accounting firms to document and address any changes in the scope of work requested by their clients. these changes could involve additional services, alterations to existing services, or changes in project timelines. by using change orders, accounting firms can clearly define the new requirements and avoid any misunderstandings or disputes with their clients.
- contractual clarity: change orders provide a formal and documented process for modifying the terms and conditions of the engagement or service agreement. they help ensure that all parties involved have a clear understanding of the changes being made, including any adjustments to pricing, deliverables, deadlines or other project parameters. this can help prevent any potential conflicts or legal issues that may arise because of ambiguous or informal changes.
- managing expectations: change orders facilitate effective communication between the accounting firm and the client. by outlining the changes in writing, both parties can review and confirm the modifications, avoiding assumptions or misinterpretations. this helps manage client expectations by ensuring that everyone is on the same page regarding the revised scope of work, costs and project timelines.
- financial implications: change orders allow accounting firms to address the financial impact of any alterations in the project. this could involve revising the fee structure, estimating additional costs or modifying billing arrangements. by formalizing these changes through change orders, accounting firms can accurately track the financial aspects of the project and maintain transparency with their clients.
- risk management: change orders can help mitigate risks associated with scope creep or unanticipated changes in a project. by documenting and agreeing upon changes through a change order process, accounting firms can protect themselves from unexpected scope expansions that may impact project timelines, resource allocation or profitability. this also provides a paper trail for potential future disputes or claims, as the agreed-upon changes are well documented.
in summary, accounting firms should use change orders to ensure clarity, manage expectations, address financial implications and mitigate risks associated with scope changes. by implementing a structured change order process, accounting firms can enhance client relationships, improve project management and safeguard their financial interests.
here are the steps to follow when implementing change orders in a professional services firm:
- start the conversation: regardless of who initiates a potential change, the first step is for the project owner and client to discuss what the change is, why it’s being requested and what its impact is on the project’s cost and timeline.
- lay the groundwork: once you have a clear understanding of what needs to be done, you can begin laying the groundwork for the change order.
- review the numbers with the client and lender, if required: before drafting a change order proposal, review the numbers with the client and lender (if required) to ensure that everyone is on the same page.
- draft a change order proposal: once you have reviewed the numbers with everyone involved, you can draft a change order proposal.
- write and sign the change order: once you have drafted a proposal that everyone agrees on, you can write the change order and get the client to sign it.
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