Client retention is key for running a thriving tax practice. However, not all clients contribute positively to your business. In fact, some clients can be detrimental to your business – sapping up your time, energy, and resources.
As a tax preparer, it’s crucial to know when and how to let go of a client. In this article, we’ll discuss the signs it’s time to let go of a client, provide tips to help you effectively sever ties with them, and the positive impact it can have on your business.
How to know when to let go of a tax client
Identifying when to sever ties with a client is a delicate but necessary skill. Signs that it may be time to part ways include:
- Constant, unreasonable demands
- Consistent scope creep without a willingness to pay for additional services
- Extreme disrespectful behavior
- Failure to respect boundaries
- Failure to pay for services
- An overall negative impact on your well
For example, imagine a client who is aggressive, accusatory, and disrespectful when they find out they owe a tax liability. In addition to accusing you of ruining their refund, they demand that you file an amended return, even though the original return was correct.
Or, let’s say you have a small business client who puts little effort into accurate record-keeping. They consistently give you a bundle of disorganized paperwork and transactions, expecting you to play the role of tax preparer and bookkeeper. However, they are adamant that they will only pay for tax preparation services, not bookkeeping services.
Clients like these demand more of your time and energy than they are paying for, causing unwarranted stress and turmoil. Overall, trust your instincts and recognize when a client relationship is doing more harm than good.
How to let go of a client
Once you’ve made the difficult decision to “fire” a client, be sure to handle the process with professionalism and care. Follow these steps to make the process painless and stress-free for you and your client.
Communicate honestly and politely
Open and honest communication is key when parting ways with a client. Clearly articulate the reasons for the decision but focus on why your business can no longer meet the client’s needs, rather than blaming them.
Using the previous examples, you might tell the first client that you understand they are frustrated by the results of their return, but since you cannot in good conscience file an amended return, you can no longer serve them. In the second example, you might reiterate what is included in your tax preparation services, respectfully reminding them that bookkeeping services are not included. Be clear yet tactful and diplomatic to avoid unnecessary confrontation.
Make sure to have it in writing
To protect yourself and your business, document the decision in writing. If you spoke to your client in person or on the phone, send a formal letter or email confirming the termination of the professional relationship, outlining the reasons discussed in your meeting. Having a written record helps protect you avoid potential misunderstandings or inaccurate accusations in the future.
Refer them to someone else
To ease your client’s concerns about ending the season without a tax preparer, you can recommend alternative tax professionals who may better suit their needs. For example, you may know another tax preparer who also offers bookkeeping services at a lower rate. By providing a referral, you demonstrate a commitment to their financial well-being, helping to mitigate potential negative word-of-mouth.
How letting go of a client can improve your business
While parting ways with a client may initially seem like a loss, it can lead to significant gains for your business by providing:
- More time to spend with other clients: By letting go of a demanding client, you free up valuable time to serve other clients more effectively. This increased focus can lead to improved service quality and overall client satisfaction.
- Reduced stress and improved well-being: Toxic client relationships can take a toll on your mental and emotional well-being. By parting ways, you create a healthier work environment, reducing stress for you and your employees.
- Increased productivity and revenue: Dealing with demanding or toxic clients often involves extra time and effort that could be better utilized elsewhere. Letting go of such clients allows you to streamline your working days, serving more clients who take less time and bring in just as much revenue.
Letting go of toxic clients can be difficult, but it’s a skill that’s critical for the well-being of your business. If you’re burdened by toxic client relationships, don’t hesitate to take the necessary steps to protect your business’s future success. By communicating honestly, documenting the process, and making thoughtful referrals, you can protect your professional reputation and create space for future growth.