Accountants - Professional clearance, pay monthly in advance

[Maslins]

With an increasing number of accountants charging monthly in advance for accounts/tax work, it's making the whole professional clearance thing more of a pain.

Previously, someone came to you with accounts that need doing. Assuming you get on and they accept your quote, you write to the previous accountant checking all is ok and asking for the prior year's accounts (which were done & dusted months earlier). The previous accountant can easily reply promptly with all info requested.

These days, a lot of the clients we win will move to us on the first day of a new accounting year. They've normally already paid their previous accountant to do the work for the year just passed. Most of the time the accountant won't get these accounts done until 6+ months after the year end...so we're left waiting (often in the dark about a lot of things) for quite a long time before professional clearance arrives, if they ever bother.

What do others do about this? When giving professional clearance, do you write one letter/email granting it & saying info will follow, then a second when you've finished and submitted the work?

[Williams lester]

With an increasing number of accountants charging monthly in advance for accounts/tax work, it's making the whole professional clearance thing more of a pain.

Previously, someone came to you with accounts that need doing. Assuming you get on and they accept your quote, you write to the previous accountant checking all is ok and asking for the prior year's accounts (which were done & dusted months earlier). The previous accountant can easily reply promptly with all info requested.

These days, a lot of the clients we win will move to us on the first day of a new accounting year. They've normally already paid their previous accountant to do the work for the year just passed. Most of the time the accountant won't get these accounts done until 6+ months after the year end...so we're left waiting (often in the dark about a lot of things) for quite a long time before professional clearance arrives, if they ever bother.

What do others do about this? When giving professional clearance, do you write one letter/email granting it & saying info will follow, then a second when you've finished and submitted the work?

We never have to do this, as we never have clients leaving! ;)

[MyAccountantOnline]

With an increasing number of accountants charging monthly in advance for accounts/tax work, it's making the whole professional clearance thing more of a pain.

Previously, someone came to you with accounts that need doing. Assuming you get on and they accept your quote, you write to the previous accountant checking all is ok and asking for the prior year's accounts (which were done & dusted months earlier). The previous accountant can easily reply promptly with all info requested.

These days, a lot of the clients we win will move to us on the first day of a new accounting year. They've normally already paid their previous accountant to do the work for the year just passed. Most of the time the accountant won't get these accounts done until 6+ months after the year end...so we're left waiting (often in the dark about a lot of things) for quite a long time before professional clearance arrives, if they ever bother.

What do others do about this? When giving professional clearance, do you write one letter/email granting it & saying info will follow, then a second when you've finished and submitted the work?

I could be really smug and say we never loose any clients - actually we really havent yet, but when we do I have no qualms whatsoever about sending hand-over information promptly and enabling the client to move on if they wish to change. I never ever see that point of being difficult and I know many accountants are.

We charge monthly but dont charge fees in advance - its too messy for me and complicated. I need a simple life! We just charge month by month for work done.

I have this as one of the frequently asked questions on our website -

How do I stop using your service?

We hope you will want to stay with us for a very long time but if you do decide to leave us just let us know you no longer require our services. We don’t insist on any contract period. Please bear in mind that we won’t refund any of the monthly charges as we undertake our work on a monthly basis.

[elainec100@cheapaccounting]

The professional clearance can be given straight away - the working papers can follow after the accounts done.

[MyAccountantOnline]

The professional clearance can be given straight away - the working papers can follow after the accounts done.

Its a sign of your age when you refer to professional clearance;):D:D

[elainec100@cheapaccounting]

Its a sign of your age when you refer to professional clearance;):D:D

well I am old (and experienced :D:p)

[MyAccountantOnline]

a lot of the clients we win will move to us on the first day of a new accounting year. They've normally already paid their previous accountant to do the work for the year just passed. Most of the time the accountant won't get these accounts done until 6+ months after the year end...so we're left waiting (often in the dark about a lot of things) for quite a long time before professional clearance arrives, if they ever bother.


Maslins just been mulling over your post - if you take on a new client when the former accountant hasnt prepared the accounts I would simply do the outstanding accounts when I take on the client, unless they have been started by the old accountants, and if any fee refund is due for fees paid in advance that would be repayable to the client. Its one of the reasons I dont charge fees in advance it just gets so messy.

[MyAccountantOnline]

well I am old (and experienced :D:p)


of course what I really meant to say is that it shows you have many years practical experience of being a professional accountant. ;)

I struggle not to say ''professional clearance'' too - old habits die hard:)

[Maslins]

Maslins just been mulling over your post - if you take on a new client when the former accountant hasnt prepared the accounts I would simply do the outstanding accounts when I take on the client, unless they have been started by the old accountants, and if any fee refund is due for fees paid in advance that would be repayable to the client. Its one of the reasons I dont charge fees in advance it just gets so messy.

The typical situation I have is winning a client from one of the big contractor practices (I won't name any names, but any accountants in this market can probably guess).

I very much doubt the client would get any kind of refund from the previous accountant if we did the year end accounts, so it never makes sense for us to do so (as we won't do it for free, so the client would end up paying twice).

For example, with your structure Nicola, you charge monthly for the bookkeeping etc, with no extra charge for the annual statutory ones. So in reality your monthly fee must be bumped up from what "just" the bookkeeping would cost, to contribute towards the time taken to do the annual stuff...so your clients are paying in advance for the year end bits too (at least in part)? If someone left you right at the end of accounting year, you presumably still would do the year end accounts/CT.

I guess the answer is as Elaine suggests, a two stage procedure.

...and as an aside, is it not called professional clearance anymore?! I consider myself a "young" one (despite my worldly wise avatar) but if it's changed, I didn't realise!

[elainec100@cheapaccounting]

Still professional clearance for ICAEW

[elainec100@cheapaccounting]

Maslins just been mulling over your post - if you take on a new client when the former accountant hasnt prepared the accounts I would simply do the outstanding accounts when I take on the client, unless they have been started by the old accountants, and if any fee refund is due for fees paid in advance that would be repayable to the client. Its one of the reasons I dont charge fees in advance it just gets so messy.


For me I do the work as instructed by the client.

I give the client the option here - explaining the alternatives.

I would never want a situation where the client ends up paying twice for the same work.

[MyAccountantOnline]

The typical situation I have is winning a client from one of the big contractor practices (I won't name any names, but any accountants in this market can probably guess).

I very much doubt the client would get any kind of refund from the previous accountant if we did the year end accounts, so it never makes sense for us to do so (as we won't do it for free, so the client would end up paying twice).

For example, with your structure Nicola, you charge monthly for the bookkeeping etc, with no extra charge for the annual statutory ones. So in reality your monthly fee must be bumped up from what "just" the bookkeeping would cost, to contribute towards the time taken to do the annual stuff...so your clients are paying in advance for the year end bits too (at least in part)? If someone left you right at the end of accounting year, you presumably still would do the year end accounts/CT.

I guess the answer is as Elaine suggests, a two stage procedure.

...and as an aside, is it not called professional clearance anymore?! I consider myself a "young" one (despite my worldly wise avatar) but if it's changed, I didn't realise!

I havent taken on any clients from the type of practices I think you are refering to, but I have from other practices where fees have been paid in advance, and refunds have most been certainly issued. When they havent I've just sent polite reminders and they have always been forthcoming.

I see absolutely no reason whatsover why a client shouldnt ask for, and get a refund where they have paid in advance for work which has not been completed.

I think the accountants professional body would have something to say if an accountant held onto fees paid in advance when a client has changed accountants. Assuming of course they are members of a professional body.

With my own charging structure for our all in one service I wouldnt agree that their is any 'bumping-up' of the monthly fee at all. When you are looking after all of the clients accounts each month and do a full and through job (as we do) you really are doing 99% of the year end accounts anyway.

Once a client leaves they leave - we issue a disengagement letter and work stops whenever they decide to leave.

No its not professional clearance but so many of us refer to it as that:) (whoops - Edit - unless you are ICAEW as Elaine has kindly pointed out)

[MyAccountantOnline]

Still professional clearance for ICAEW


You lot live in the dark ages:) ACCA has obviously moved with the times. I shall stop this now!

[elainec100@cheapaccounting]

You lot live in the dark ages:) ACCA has obviously moved with the times. I shall stop this now!

I would if I were you :eek::eek::eek:

[MyAccountantOnline]

I would if I were you :eek::eek::eek:

Time for tea......:D

[David Griffiths]

You lot live in the dark ages:) ACCA has obviously moved with the times. I shall stop this now!

Pray, do enlighten us what term the ACCA has dreamed up for what the rest of the world calls a professional clearance letter.

Probably something snappy like "Inter accounting firm client transfer regulatory enquiry letter" :D

[Maslins]

Probably something snappy like "Inter accounting firm client transfer regulatory enquiry letter" :D

I still think it should be called the "ner ner" letter. :D

[MyAccountantOnline]

Pray, do enlighten us what term the ACCA has dreamed up for what the rest of the world calls a professional clearance letter.

Probably something snappy like "Inter accounting firm client transfer regulatory enquiry letter" :D

I had a slap on the wrist from a very well spoken lady at the ACCA when I called to query something and referred to professional clearance - she told me in no uncertain terms it was no longer 'professional clearance'' but too be perfectly honest I cant remember the exact terminology she used, something along the lines of communicating with the former accountant....

I cant see it from a very quick scan of the online ACCA rulebook either. At the end of the day its the same thing we all know what we mean;)

I like your suggestion David.

[MyAccountantOnline]

I still think it should be called the "ner ner" letter. :D


Even better:D:D

[David Griffiths]

I still think it should be called the "ner ner" letter. :D

Yes, but the letter that you get back might be their "better luck than us letter"

That'll wipe the smile off your face! :p

I'm always a little concerned when the reply isn't "we are pleased to confirm" but is "we are absolutely delighted to confirm"

[elainec100@cheapaccounting]

So does that mean ACCA has dropped the term 'professional'?

[elainec100@cheapaccounting]

I'm always a little concerned when the reply isn't "we are pleased to confirm" but is "we are absolutely delighted to confirm"

or it is with immense relief ......
:D:D:D

I have of course never had to write such a letter;)

[MyAccountantOnline]

So does that mean ACCA has dropped the term 'professional'?

No its the clearance bit:D:D

[David Griffiths]

Ah, I see. It's the "professional I know no-thing" letter

[Strontium Dog]

We charge monthly but dont charge fees in advance - its too messy for me and complicated. I need a simple life! We just charge month by month for work done.

I have this as one of the frequently asked questions on our website -

How do I stop using your service?

We hope you will want to stay with us for a very long time but if you do decide to leave us just let us know you no longer require our services. We don’t insist on any contract period. Please bear in mind that we won’t refund any of the monthly charges as we undertake our work on a monthly basis.


Nicola: I like your method, as it creates tie-in. Presumably if the client wants you to do their year end accounts they need to pay you at least for the month following the year end and probably the next one whilst you finalise the accounts? This would be even if they wanted to go elsewhere for the following year.

I started this very same topic on accountingweb a while back, as I was thinking of moving to what is effectively a monthly retainer system where you just do the work taht crops up that month. I still haven't done it however, precisely because no-one could give me a convincing arguement as to what to do when someone leaves.

For compliance type work, I mostly just collect regular amounts by SO and issue invoices as and when each piece of work is completed. A bit old fashioned I suppose.

[MyAccountantOnline]

Nicola: I like your method, as it creates tie-in. Presumably if the client wants you to do their year end accounts they need to pay you at least for the month following the year end and probably the next one whilst you finalise the accounts? This would be even if they wanted to go elsewhere for the following year.

I started this very same topic on accountingweb a while back, as I was thinking of moving to what is effectively a monthly retainer system where you just do the work taht crops up that month. I still haven't done it however, precisely because no-one could give me a convincing arguement as to what to do when someone leaves.

For compliance type work, I mostly just collect regular amounts by SO and issue invoices as and when each piece of work is completed. A bit old fashioned I suppose.


Thank you.

I have been in practice for several years on my own and have tried and tested numerous methods of monthly billing.

I found so many monthly payment schemes soon get so difficult to manage and it was taking ages to do my own accounts/keep track of the payments once you have a decent number of clients.

What I do now is really simple - clients pay for each months work at the start of each month.

If a client joins us part way through a year they just pay for the number of months to bring them up to date.

On rare ocassions where a clients joins us and needs a years accounts done we agree one off payment arrangements normally 1/2 up front and the rest before accounts are filed with HMRC/completed.

It means minimal WIP/debtors/chasing debts/hassle!:)

[Maslins]

As Nicola says, I started with a pay monthly but invoice as and when...but it all quickly got very messy, with clients never knowing exactly where they stood. Also made the VAT a bit trickier (payments triggering VAT tax point...unless an invoice raised 14 days after blabla).

We now invoice monthly and clients pay monthly (except the naughty ones). So much easier...but then it does potentially create a cut off problem when clients join/leave as work isn't necessarily done monthly.