bonus: sample client disengagement letter.
by sandi leyva and michelle long
how many clients have you fired?
more small firm growth strategies: what to do when a client doesn’t pay | the dreaded ‘quick question’ | how to handle referrals – and how not to | why clients need dashboards | five ways to raise your prices | your existing clients are your best leads | need more business? focus on referrals
let’s talk about firing a client because sometimes you do need to fire your client. maybe they’re difficult to work with, or a guy is belligerent and loud and yells, and you don’t want to work for him. maybe there are ethical issues.
one of my clients was a specialty sporting goods store, and he sold guns. i was always nervous when i went in there and said, “mitch, put the gun away before i give you the numbers. i don’t want you to shoot the messenger.” i didn’t have a problem with that, but maybe you’re totally against guns and don’t want to have them as a client or any other issue.
this is a true situation where this is way back when and remember, i’ve been in business for a long time. remember the oklahoma city bombing? what’s it been, like 20 years ago? i had a client, and it was after the oklahoma city bombing, and he suddenly got very involved in the militia, and he was protesting the irs and writing articles about the irs in some 51st militia magazine and things. i’m thinking i don’t want to be doing his taxes.
that was about the time i decided i’m not doing taxes anymore. i called him up and said, “i’m not doing taxes anymore, so you’ll have to find someone else.” i didn’t want to be associated with him. i did not want my name associated when he got arrested. i didn’t feel comfortable with that situation. he’s a nice guy, and he can believe whatever he wants to believe, but if i’m his accountant, i don’t want to be associated with that. so that was another issue for me, and so i said i’m not doing taxes anymore, which was true. it was part of the catalyst that led me to decide that.
i fired him and told him to move on, and told him he needed to find someone else. maybe you need to increase their fees, and someone else said that keep increasing those fees, and either you’re getting so much money you don’t mind working for them, or they leave and go somewhere else. that way, then it’s voluntary, and they move on.
send a disengagement letter with a specific date…as of may 31st, i’ll no longer be your accountant blah-blah-blah. make sure you return any and all original documents you might have, and then also you might want to provide them with the upcoming due dates: “i will no longer be your accountant as of may 31st, and you’ve got xyz due on june 10th, and this is due on june15th and this on june 30th and best of luck to you in the future.”
sample client disengagement letter
date
name
address
dear __,
we appreciate your business and want to let you know of a change in direction in our firm. as our company has grown, we have worked hard to maintain our level of service to all clients. unfortunately, we can no longer do so and keep all of our current clients. therefore, we regrettably must ask you to engage another firm to provide you with (monthly accounting services, tax return preparation services, etc.) effective january 1, 2017.
we will be happy to work with your new firm to ensure that the conversion is a painless one.
thank you for your past business and your understanding. we wish you the best of success in the future.
sincerely,
try to be amicable about it. hopefully, you’ll part on good terms as you don’t want to leave with a bad taste in their mouth or yours.
definitely something like a disengagement letter. i would actually send a certified return receipt requested so you can prove they got it, especially if there are filing requirements for payroll taxes or income taxes where you can prove the client received notification. they can’t say you didn’t tell me. i sent you an email…i didn’t get it. i didn’t see it. so that’s where sometimes good old regular mail certified return receipt requested where they have to sign it, and you get it back proving they received it might be something there. someone else said fedex is better because they can’t refuse delivery.
in a lot of cases, on a firing, you might need to consult an attorney. you shouldn’t put a reason on a disengagement letter because of legal reasons. clients can get really mad at being rejected because no one likes to be rejected. you might need to contact an attorney if you have some real complications with a client that you’re firing.
we want to protect ourselves. if you don’t have e & o insurance, you need to get it. check with the nicpa or aipb or other associations you might belong to. check with your own insurance company and check and look around to find errors & omissions insurance. it’s not expensive, and it really can help protect you. and not only protect you, but when you have a situation like this, you can call them and say, “what do i do? can you help me? do you have a sample template?”
we’ve provided a template, but your e & o provider, a lot of times, will have sample engagement letters and other sample letters you can use that they legally drafted for you.
how many clients have you fired? we asked at a conference, and 25 percent said none, 33 percent had fired two to three, and some had fired more than five, and some of us have been in business longer, so we may have fired more over the years.
some of you who have fired none, it’s really hard when you’re first getting started. your first year you do accept pita clients, you work with clients that maybe you’d rather not, and after you start building up your client base, that’s when you need to start getting rid of some of the worse clients so you can have the a and b clients as opposed to the c and d and pita ones.
your clients will change over time as your firm grows and as you grow your business and have more clients and be more selective. just keep that in mind, and hopefully, you’ll be able to fire clients soon because it’s great. doesn’t it feel good sometimes to fire a client? sometimes it feels really good to fire a client.