Five ways to transition bad clients

When your firm began, you probably took any client that could use your services. A few years on however, you’ve likely realized that not all clients are created equal, and some can even harm your firm by hurting revenue or decreasing staff morale.

Some clients have unreasonable expectations about what your firm should do and how much you should charge for your services. Perhaps they are in an industry your staff is unfamiliar with, requiring them to spend time on the client’s work that is not billable at best, and frustrating at worst.

Once you’ve defined who are your ideal clients, and are ready to focus your firm on providing the best services for them, the last piece of the puzzle is to spend some time considering what to do with your current clients who might be less than ideal.

Here are some ideas to help you make this transition smoother for you and your clients.

Focus your team

Move your ‘niche clients’ to one or two staff members who can solely focus on those types of clients. Perhaps the clients are in an industry that you may want to work in later, or maybe they are in the right industry but aren’t the right size client just yet. If your firm’s size allows, and you have a couple staff who are looking for a challenge, this could be a great way to grow these clients and staff members. Be sure to measure results, to determine the group’s success, looking for improved employee morale, customer satisfaction, or efficiency, and perhaps even sales growth as the team finds additional services for these clients.

Refer them to another accounting practice

Provide a referral to another firm who can better meet their needs at this time. If you no longer wish to provide certain services anymore, or use older systems, referring your existing clients who need these services to them to another high-quality firm is a great way to transition these clients out of your firm. Perhaps look to network in with other accounting firms who are going through a similar process to see if you can have them refer their ‘non-ideal’ clients to you when your firm would be a better match.

Re-shape them into an ideal client

Letting some clients know that they are on the verge of being dropped may be just the nudge they need to convert to the cloud platform you are using or improve their working relationship with your staff. Explain the focus of your firm, the specific services you will be offering and the potential benefits to them, and they too may decide they are ready to change the way they do business. This particular exercise should really be done each year, to ensure that all clients are growing with your firm.

Raise your fees to make them worth your while

Sometimes clients are not ideal because their work is no longer profitable (usually “old school clients” who you’ve kept around for a while). Talk with these clients to explain that while they might be great to work with, being stuck in the dark ages of manual processes and systems makes their work unprofitable for you. Another upside is that significant increase in their fee may be just the incentive they need to spur them to move to a new system. Have a conversation with them and make sure they understand that their rates will continue to remain high while they insist on staying on manual systems.

Send a Dear John letter

Let’s face it – some clients are just unpalatable and don’t bring out the best in your firm or your staff. Or they just don’t pay their bills. You may feel that making a referral to another might damage your professional networks in the accounting community. It is time to send a letter offering your help to transition their files and information to a new firm they select.

You’ve done the hard work of defining your firm and identifying your ideal client, it is now time to take the step of making room for them in your firm. It may not be easy, but the payoff will be a group of clients that everyone wants to work with, and the excitement of growing a firm that’s ready and able to take on new clients.


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