MeryttYour letter says what you do. Nothing says what you charge for.
Every practice has an engagement letter. Almost none of them have written down the thing that costs money, which is where the fee stops.
The letter is not the problem. The edge is.
Engagement letters are good now. Most practices use a decent template. It covers the statutory work, and it gets signed. That is not where practices lose money.
They lose it at the edge. A client rings about a car they are thinking of buying through the company. Somebody wants to know if their daughter can go on the payroll. A landlord client sends three years of rental statements in a carrier bag in January.
None of those are in the letter. All of them are real work. And every one of them stops at the same desk, because the only person allowed to say “that is extra, and here is what it costs” is a partner.
That is not a pricing problem. It is a written-down problem.
A quick question is only quick for the person asking it.
And it gets worse in a way nobody logs.
The first year, you absorb it. It is one client, it is goodwill, and it takes a few minutes. Absorbing it is faster than having the conversation.
The second year, the client expects it, because last year it was free. Now saying no is a conversation about a change, which is harder than the first conversation would have been.
A few years on, you have a book where the fee and the work have quietly come apart. There is no record of when that happened, or on which clients. The write-off shows up in recovery rates. The cause does not show up anywhere.
Then you hire. The new person is good, and they still cannot answer it, so they bring it to you. You moved the work. You kept the deciding.
What written down looks like.
A real shape, not a form to fill in. One decision, written the way a partner would say it out loud. Then somebody who is not a partner can make the same call, and be right.
Is this inside the fee?
- Inside if we named it in the letter, or it takes under fifteen minutes and needs no digging.
- Outside if it needs a sum, a second opinion, or a filing we did not list.
- Always outside if HMRC has opened something, or the deal has not happened yet.
Before any work starts
- Say it is extra in the same reply. Later is the part clients mind.
- Give a fixed number where you can. A range invites a haggle.
- Get a yes in writing. An email saying go ahead is enough.
- Log it against the client, so next year’s fee talk has proof in it.
What still comes to a partner
- Anything that changes what the client should already have filed.
- Anything a client has been told is free by somebody here.
- Anything above the extra-work limit the partners have set.
- Any client in their first year with us.
- Any case where we would be checking our own advice.
See how little of it is process. Nearly all of it is reasons. The reason is what lets somebody handle a case you never thought of.
Why it works. A junior does not need to know what you would charge. They need to know where the line is, what to say, and when to stop. That is the whole handover.
Why it stays true. The first time somebody gets it wrong, you do not fix the job. You add the case to the list. Then it does not come back.
The five a practice keeps re-making.
Every practice answers these. The questions are common property. Your answers are the only part that is yours, and almost nobody has written theirs down.
- Is it in the feeThe one above. Worth more than the other four together.
- Chasing recordsWhen you chase, how often, what you say the third time, and when a client becomes a problem rather than a delay.
- Is it ready to sendWhat a partner is really checking for. Write that, and the check stops being a second draft.
- Do we take them onThe anti-money-laundering file, and the judgement about whether they will be a hard client, made in seconds.
- Do we let them goThe one nobody writes down, so it never happens, and the book gets heavier every year.
Your own numbers, not ours.
We will not tell you what this saves you. We have not measured a year of before and after in a practice, so any percentage we picked would be one we chose because it looked good.
Here is the sum instead. Put your own numbers in it.
Clients, times edge cases per client each quarter, times four is how many of these land in a year. For example, forty clients with two edge cases a quarter is three hundred and twenty a year.
Then: how many of those reach a partner, times the minutes each one takes. Count the minutes honestly, and include the time it takes to get back to what you were doing.
That number is the ceiling on the practice. Not the fee, not the headcount. The number of edge cases one person can hold.
You cannot hire your way out of a decision only you are allowed to make.
What we would build on it.
This is the kind of thing your Roadmap finds. It names the decisions that keep reaching a partner, and it says what to build around them, with a price.
After the build, the rule stops being a document. Pulse reads the email when it arrives, sees that it sits outside the fee, and drafts a reply that quotes the extra work. The draft goes to whoever handles that client, because a quote is the kind of thing a person sends.
Every correction becomes a rule it did not have before. The case nobody thought of gets added the first time it happens.
We run our own company on Pulse. It is how two founders get through the work.
Questions
Why do accountancy practices lose money on out-of-scope work?
Because the engagement letter says what is included and nothing says where the fee stops. Every edge case then has to reach a partner, who is the only person allowed to say that it is extra. The cost is the interruption rather than the work, and it shows up in recovery rates with no record of the cause.
What should be written down about scope in an accountancy practice?
Where the fee stops, what to say the moment somebody spots an edge case, and the short list of cases that must still come to a partner. Mostly reasons rather than process, because the reason is what lets somebody handle a case nobody thought of.
Which decisions does an accountancy practice keep re-making?
Five. Whether work is inside the fee, how records get chased and when a client becomes a problem rather than a delay, what a partner is really checking before something is sent, whether to take a client on, and whether to let one go.