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How to Exit Gracefully from Your ‘Legacy Clients’ for the Benefit of Your Small Accountancy Practice

by | Apr 9, 2018 | AMC Book Extracts, Client portfolio analysis

Letting a client go is never easy – but sometimes it’s necessary. This blog article, based on an extract from The Accountants Millionaires Club book, explores the reasons why letting go of legacy clients can be good for business and how to exit them gracefully. 

 

What are legacy clients? 

Let’s face it. Not all client relationships are matches made in heaven, and while this may not be a problem other than causing more stress than is necessary, a lot of the time it can have a big impact on the growth of a business. 

So what makes a ‘bad’ client relationship? 

Client relationships that are considered ‘bad’ are ones where: 

  • the clients no longer fit with your firm and its future strategy 
  • the profitability is low 
  • they are low fee and/or low recovery clients 
  • they refuse to work the way you want them to 
  • they now no longer fit with the type of clients you want to be working with 

Many small accountancy practices have a large number of client relationships that fit one or more of these criteria. In fact, many of them are made up of low fee, low recovery or needy clients who have been with them for a long time. These are what are known as their legacy clients; clients that they took on when they were desperate for any client.

What are the benefits of letting legacy clients go? 

When you find yourself in a situation where you’ve identified bad client relationships or your legacy clients, you have two choices: stick with it, even if it is detrimental to your firm, or find a way to exit gracefully while keeping a good relationship and your company’s reputation intact. 

If you decide to go with the latter, this can mean many benefits to you and your company, such as: 

  • More free time for you to work more on the business rather than in the business 
  • More time and capacity in your firm for you to work with the more profitable clients  
  • More capacity in your firm for you to win the types of clients you want to work with 
  • A more productive environment as morale will be higher among staff 

So letting go of your legacy clients offer many benefits, as well as simply making everybody happier to work with easier clients that they want. Now all you need to know is how to exit gracefully.  

How to exit from clients you no longer want to work with 

When you’ve identified that it is in the best interest of your small accountancy practice to exit from certain clients or legacy clients, it is important that you plan to do so gracefully. 

No one likes to feel rejected and it’s not good for business to treat a soon-to-be former client badly, so here is how you can let a client go to make the transition as smooth as possible: 

  • Don’t put it off – once you have decided to exit a client, take a moment to plan the transition but don’t put off the inevitable. 
  • Have their books and accounts completely up-to-date – make sure to do this before having the conversation about exiting them, it shows professionalism and will make the transition much more efficient. 
  • Help them secure another accountant – don’t leave them without an accountant. Decide before having the conversation whether you will recommend another accountant to them or sell their business to another accountant and take a percentage of their first year’s fees. 
  • Have the conversation with them face to face – avoid exiting a client via email, and where possible, via telephone. A face to face conversation shows your client the respect they deserve and that you have appreciated their business.