We’ve been involved with local accountants through clients and the bottom-line determinant of which particular accountant and service to use is cost. Understandable, particularly in these hard times and when dealing with financial experts like accountants, however care must be taken as to what the true cost ends up being.
We’ve therefore come up with 5 areas of cost to carefully investigate in order to make sure you receive the most value from the lowest cost (also applicable to other business types):
1. VAT – simple, but can be an unexpected 20% on the cost that you hadn’t factored into the equation. This depends both on your own business’ VAT status and that of the accountant. So best case scenario is where you are resisted for VAT yourself so if another business charges you VAT on their service then you simply claim back in your VAT return. The worst case scenario is where you’re not VAT registered and therefore if you instruct a firm who needs to charge VAT then you get hit with this extra cost which you can’t claim back, in which case it may be worth looking at an often-smaller independent firm or sole trader who does not need to charge VAT in the first place.
2. Free Consultations – a lot of firms now offer a free consultation to start off with, maybe an hour or so, to go through with you face-to-face or maybe over the phone what your issues are and offer some general advice. A definite opportunity to look into, although two words of caution – firstly make sure you receive some helpful advice back rather than just an opportunity to sell their generic services (they need to be applied to your situation), and secondly that you don’t end up paying higher fees afterwards or being locked into a contract (yes the idea of this is to encourage you to be a client, but only on a ‘normal’ basis afterwards).
3. Credit terms – this is to do with when you need to actually pay their fee invoice once generated, often within 30 days. This can be a great help cash-wise, particularly if the accounting advice is leading to say a tax credit which may be coming from HMRC the following month which will help pay the accountant’s invoice then as well. Double check this payment-period both in their written T&S’s but also chat through if you plan to be a little late or you may receive uncomfortable credit-control action from then.
4. Frequency – clarify how often they will charge you, typically in just one invoice at the end of the instruction but firstly check when the ‘end’ is (for example when they have finished work or when you receive confirmation from an authority like companies house or HMRC), and whether any interim charges will be made throughout the instruction.
5. Incentives – check if there are any ways to incentivise your accountant to secure the best possible savings and value for you, maybe by agreeing an additional fee based upon actual savings secured, or a general bonus. They should of course have your best interests at heart anyway so this often doesn’t need expounding too much on smaller instructions, and make sure that whatever is agreed is confirmed in writing.