avoiding projects hung up in process

how to climb out of “done but” hell.

by frank stitely
the relentless cpa

a project hung up in process is one when there is a disagreement as to the status between people involved in a project. for example, a client thinks he has answered your tax return questions, while you believe he has not. another example is when a tax return preparer believes a return is ready for review while the reviewer does not believe it’s ready.

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the result of a hung-up project is a dead project – one that’s not moving to completion. if a tax return gets hung up, eventually your client calls you, and you get to waste time determining why the project stopped moving. by now, you know this increases wip and thus decreases turnaround time.

let’s dissect an example from the real non-accounting world.

a couple of days ago, my wife, laura, placed an order with one of our favorite restaurants. because we are still in covid lockdown mode, she chose to pick up our order rather than have it delivered. the restaurant is only five minutes away, and the delivery services tend to deliver cold food.

during our lovely little pandemic, restaurants have developed two meal pickup models: curbside pickup or pickup in the lobby. in the curbside model, you sit in your car and a restaurant employee brings the food out to you. in the lobby model, you park your car, enter the restaurant and pick up your food.

i asked laura which model this restaurant followed.

her answer was, “i assume it’s curbside. i didn’t have a choice when i ordered.”

we have the genesis of a project hung up in process. the orderer (laura) didn’t give the pickup person (me) a clean handoff from the ordering step in the workflow process to the pickup step.

i have a choice that potentially will result in wasted time and cold food. first, i could assume curbside pickup. i could park in front of the restaurant and wait. but what if that’s the wrong choice? after pointlessly waiting at the curb, i then have to drive to the parking garage, park and walk back to the restaurant. all the while, my prime rib sandwich gets colder.

or, i could assume lobby pickup. i park in the garage, walk to the restaurant and try to enter the lobby. there, i’m stopped by a mask-wearing employee telling me that i can’t go in the restaurant. i have to walk back to the car. then i must drive to the curbside to pick up the food. i hate a cold prime rib sandwich.

because the handoff from order to delivery was not cleanly accomplished, the process requires more time (wip) and results in a bad result – cold food. the person performing the order status step didn’t provide the necessary information to the delivery person. more wip once again results in worse turnaround time.

obviously, laura will never read this, or i’ll be consuming all of my prime rib sandwiches from a hotel.

let’s convert this example into a common tax preparation experience.

a tax preparer, bill, sends jane, the reviewer, a corporate tax return for review with the following comments:

1. i assumed there’s no stockholder health insurance as the client didn’t provide it – please confirm.
2. i couldn’t get m-1 to balance. please take a look and let me know where i went wrong.
3. i entered the new investor loans as current liabilities – please confirm.

has a preparer ever done this to you? we call these “done but” returns. the returns are done, but they’re really not. they are not ready for review with open points. as you can see, a couple of the points require client input that should have been sought at an earlier stage of the project.

thus, our review is not a review, but a re-preparation combined with a review. this is a project that will stall in process as the reviewer knows this one will require a lot of time. it falls into the abyss of hung-up projects. the client will eventually call about the status, and we get to experience all of the joy of “what’s the status of” hell.

another one of my least favorite return-reviewer situations is the court brief. a court brief happens when the preparer sends a project to review with voluminous notes that would make johnnie cochran smile. if you don’t remember johnnie cochran, he was o.j. simpson’s attorney famous for the glove quote, “if it doesn’t fit, you must acquit.”

from a project management standpoint, johnnie cochrane stopped that trial cold the way your preparers stop tax returns with court briefs.

here are some examples of items from court briefs written by preparers:

1. i treated the federal withholding on the w-2 forms as federal tax payments on page 2 of the 1040.
2. i put the self-employment income on schedule c – please confirm.
3. i didn’t know what to do, so i just … (fill in some version of “screwed up” here.)
4. why do i have a basis schedule?
5. should we have asked for the social security number for the new child?
6. is the new child a boy or a girl?
7. we need direct deposit information.

help me god. i have seen so many of these. these are all attempts to evade responsibility for the final product to be delivered to the client. captain obvious would have made a wonderful tax preparer. we have yet another “done but” return.

the solution to “done but” projects is a change in the mindset and behavior of both the preparer and reviewer.

first, the preparer’s mindset must transform from data entry clerk to some more advanced state of enlightenment. the preparer is accountable for providing a completed project that can be delivered to the client. the preparer must not deliver a “done but.”

second, kick “done but” projects right back to the preparer. do not reinforce the behavior of delivering junk to the reviewer.

you probably noticed that some of the preparer notes scream out for more training and some are just laziness. the training has to occur. hopefully, you are doing this before tax season. but if you have assigned a return to someone without the skills to successfully complete the return, the training must happen before the return gets to review. pushing the training ever later into tax season from the preparation stage to the review stage is just stupid time management.

you address the laziness with a baseball bat.

change the behavior of your reviewers as well. they must kick the “done but” returns back to the preparer. fixing the mistakes reinforces bad preparer behavior. if an incomplete return is coming back to them, preparers learn that completing the return is more efficient for them than delivering a “done but” and getting to fix it later.

next, let’s discuss projects hung up between clients and preparers. after 31 tax seasons, i swear to god that some clients enjoy the tax preparation process so much they want it to last forever. here’s how they do that.

first, they answer questions with questions:

preparer: how much did you pay in personal property tax?

client: how much should i have paid? did i pay too much?

remember the movie, “cool hand luke?” “what we’ve got here is failure to communicate.”

you were expecting a number and you got a series of questions. how much closer is this return to completion? arguably, it went backward. you get to ask the question again, and you get the bonus task of answering a stupid question. this is what causes cpa suicides during tax season.

then, they answer with non-answers:

preparer: how much did you pay for that ford stock that you sold in june?

client: i’ll get back to you. (clicks on the submit answers button.)

you get excited when you get the notification that, after three weeks, your client has answered your questions. you’ll be able to bill this return sometime before you die. then, you find out that you got a non-answer. normally, you get more than one of these non-answers.

the status is right back where it was – nowhere. you prepare another questions list consisting mostly of unanswered questions from the first list. more wip. slower turnaround time. worse yet, you could have used this wasted time on another return.

the long-term solution to this is blowing up our public education system by recruiting teachers who can teach the valuable real world skill of answering questions. however, that won’t help us next tax season. also, don’t hold your breath waiting for educational reform. my teacher clients give non-answers as well.

i wish i had the perfect, simple answer to fixing client behavior, but i don’t. here are some ways to reduce the impact short of murder.

first, ask better questions. ask for what you really want. consider the possible ways your client can misunderstand your question and try to eliminate the misunderstandings up front. i have blogged a number of times on this topic. if you want a full discussion, visit the blog at www.claritypracticemanagement.com. for now, here’s a brief lesson.

let’s consider a question about real estate taxes. here’s how newbies ask this question:

newbie: did you pay any real estate taxes?

what’s wrong with this? it’s a yes/no question, and you want a dollar amount. here’s how a grizzled veteran of tax season wars asks:

grizzled veteran: how much did you pay in real estate taxes on your home? how much did you pay on your rental at 315 main street?

ask with the desired answer in mind. note that this asks for an amount and also separate amounts that may appear on different forms (a and e).

here’s another example.

newbie: did you provide all of your w-2 forms? your wage income seems low compared to last year.

this guarantees a client non-answer. they have no idea what their wage income was last year and no idea what it is this year. here’s the client response:

client: i gave you everything i have. look in the file again.

here’s a better way:

grizzled veteran: last year you received a w-2 form from perverts, inc. did you receive one this year? if yes, please provide it.

this narrows down what you are asking for to something a client can wrap his head around. of course, the response may still be the following:

client: i’m certain i gave it to you. look again.

my response: here is the pdf file of everything you gave us. please help me find the w-2 in this file.

one year a client insisted a half-dozen times that she had given us her charity receipts. she got really mean, accusing us of losing her documents. about april 14^th, she found the receipts in her desk. did we get an apology? of course not, and she left us the next year. this was certainly for the best.

here’s another question newbies ask that almost never gets a real response:

newbie: what’s the basis of the ford stock that you sold?

how many mistakes can you find in a 10-word sentence? first, what client understands the term “basis”? maybe 5 percent of our clients understand. second, the client has no idea that she sold ford stock and may not even know what stock is. her broker did it. here’s a better way to ask:

grizzled veteran: how much did you pay for the ford stock that you sold on april 12^th? when did you buy it? i posted a page from the brokerage statement that shows the sale. please ask your financial planner for this information.

yes, this is a bit long, and i would not make it this long for every client. this is for the client with absolutely no knowledge of stocks. most of the time, i just ask the first two sentences, and the client realizes she may need to call her financial planner.

none of my examples represents the perfect answer to clients avoiding answering questions, but asking better questions is a big start – at least until our education system improves.

another way clients torture us is asking a dozen (or more) questions about a draft tax return. this normally only happens on balance due returns – imagine that. a return with a refund must be correct.

you don’t have much choice but to respond point by point. i just went through three rounds of this on a client with restricted stock. he just couldn’t understand that everything was on his w-2 form. there was no magical income offset somewhere. three rounds of comments and a half-dozen client-posted files later, he approved the draft. these comments added about an hour to wip. we all know what that does to turnaround time, don’t we?

i have arrived at the genesis of a solution to this. let’s start out with a hypothetical situation in which we have two tax returns that are identical in every way, except in one regard. the first return required no meetings or phone calls. the second return required an initial meeting and three phone calls.

do we bill the same amount for each of these returns? for most of us, the answer is yes. it is for my firm. we bill by the form. we have the same forms for both returns. therefore, we have the same fee. value pricing people have this issue constantly and pretty much by definition. if the returns deliver the same value to each client, the invoice should be the same regardless of the time spent.

how can we charge the same amount for two returns when our costs are so radically different? you can rationalize that we get big writeups on some returns that wash out against writedowns like we have on the second return. i hate that answer. this is something the few remaining hourly billing firms get right.

here’s my first attempt at a solution. put line items on our pricing schedule for meetings, phone calls and multiple tax return drafts. the key to my genius scheme isn’t getting the extra money. it’s making clients aware that we may charge for these behaviors and thus avoid the behaviors.

we will do a big humorous e-blast from the tax lady explaining the changes. i will use some ridiculous made-up examples about why we are implementing the charges. i will spin it to sound like it’s for their benefit, not ours.

will it work? not a chance. i will screw this up at least twice before i make it work. but eventually, we’ll have some resolution to clients delaying returns needlessly and running up our costs.

don’t crawl into the foxhole with me yet on this. once i get it working, i’ll make the rounds humble bragging about my brilliance. then it’s time to worship me. i’m thinking of starting a cult.

you can get in on the ground floor. sell all of your possessions and give me the money. i promise you’ll be the first on the alien starship taking us to a planet where clients answer their questions timely and completely.

we have covered a few ways projects get hung up in process. they all have in common someone incompletely performing a workflow step and then handing off the project to the next person. this can be staff. it can be clients.

the way to combat staff handing off incomplete work is to force them to complete the work before being allowed to hand off the project to the next person in the workflow line. the solution to stopping clients from hanging up projects is asking better questions.

however, you will never be able to completely eliminate projects hung in process. this is as achievable as a ms. america contestant’s wish for world peace. you must be the ceo of your firm. that means you must be a traffic cop searching all of the time for projects hung in process.

that won’t leave you much time to prepare tax returns personally. that’s a good thing for the growth and development of your firm.

posted on december 2, 2020