An accounting firm is only as good as the quality of its client base. Among other things, you will not build a quality staff without a quality client base. Poor quality clients also divert resources from more profitable engagements and create a high level of stress.

Why do firms have poor quality clients?

• Inadequate process for making decisions on accepting clients.
• It is difficult to abandon clients, particularly if you have invested a lot of time and resources in them.
• They place high value on “book of business” and have an obvious reluctance to fire clients.
• They fear conflict—internal conflict over whether a client should be fired, and fear of the client’s response.
• Factors such as pride and fear of change.

Firing clients is not an event, but a process:

Step 1: Set up a team to identify D-level clients. The team should represent all levels in the firm. Criteria include:

• Revenue.
• History of collections.
• Growth potential of clients.
• Profitability to the firm.
• Risk.
• Client expectations.
• Satisfaction in relationships.

D-level clients:

• Prevent you from keeping quality staff.
• Are not good managers and don’t use teamwork.
• Plan poorly.
• Don’t value technology.
• Have irrational expectations.
• Don’t take your advice.
• Don’t pay on time.
• Treat your people badly.
• Don’t want you to make money on them.
• Are risky.

If you have difficulty making evaluations of clients, ask staff for input.

Step 2: Set goals. Most firms should fire five to 10 percent of their clients annually.

Step 3: Assign responsibility to the appropriate people to meet personally with clients to be fired. Meetings should:

• Be cordial.
• Leave the door open for future communications.
• Assist clients in finding more appropriate relationships.

From Accounting Today, August 7, 2006, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004. For the complete article, click on the following link: http://www.webcpa.com/article.cfm?articleid=21126&;pg=acctoday.