At a glance
- Offboarding difficult clients is crucial for profitability, well-being, and managing legal risks.
- Spot red flags like unreasonable demands, poor record-keeping, and mistreatment of your staff.
- Protect your firm with clear engagement letters that include termination clauses and detailed records.
- Part ways professionally with a clear disengagement letter and a smooth handover process.
Bringing on new clients is a primary focus for many accountants. But mastering the art of offboarding clients can be just as important. And it’s an often-overlooked skill.
Ending an accounting relationship can be challenging, especially with long-term clients or those who pay well.
However, in cases of chronic payment issues, unreasonable demands, ethical conflicts or incompatible working relationships, it’s sometimes necessary.
And under the UK’s strict anti-money laundering (AML) regulations, offboarding risky clients isn’t just advisable; it’s essential.
UK-based accountant mentor Mark Lee, founder of Tax Advice Network, says the overused quote by American retail giant Gordon Selfridge, “the customer is always right”, is actually incomplete.
“What he actually said was ‘The customer is always right in matters of taste’,” Lee notes. “You as an expert don’t always have to do whatever your less informed, less professional client demands.”
Resigning from engagements with companies covered by the Companies Act 2006 carries legal requirements. (And if you’re resigning because of a client’s legally suspicious activity, then under s333A of the Proceeds of Crime Act, you also need to avoid tipping off the client about your suspicions.)
But whatever type and size of entity you’re parting way with, under whatever circumstances, you can use approaches and techniques that ease your path.
The experts we talked to offer several suggestions for parting with problematic clients while protecting your reputation, profitability and well-being.
Detecting a problematic client
“Many accountants start out by taking on any clients but over time, learn to spot red flags and trust their instincts,” says Lee.
Warning signs include clients who take liberties, are unresponsive, or make unreasonable demands, he adds.
Heather Townsend, founder of UK-based The Accountants’ Growth Club says clients who mistreat staff are also problematic.
“We’ve had clients that we’ve exited because they’re horrendous with our team.”
She also advises checking Companies House for publicly available information on your potential client.
“Do they have a record of filing stuff late? It’s worth taking a look.”
Caxton Pang, a Sydney-based accountant and managing director of Linton Advisory Group, says that clients consistently complain or blame others, they may be flagging potential issues on their side of the relationship.
“Take a look at their balance sheet. Drawing out money from the business for excessive personal spending, poor record-keeping, not paying their creditors or ignoring basic cashflow management suggests a lack of accountability, and that they may expect you to fix everything without their effort.”
How damaging can problematic clients be?
Difficult clients not only consume billable hours but can also cause scope creep, burnout and moral distress, impacting the entire team and diverting attention from valuable clients, says Pang.
“The real danger is cumulative: a constant undercurrent of frustration and wasted time that, over a year, can undermine the culture and financial health of the entire firm. I’ve seen top team members burn out not because of the volume of work, but because of the type of work and the clients they were doing it for.”
Townsend warns that difficult clients may publicly complain, leave negative reviews (which can be hard to get taken down) or even sue you.
“If you don’t have the right paperwork in place, or you decide it’s going to be harder and more stressful to fight, you may just have to settle.
“Problematic clients can harm your firm’s social standing, mental wellbeing and team dynamics.”
“Many accountants start out by taking on any clients but over time, learn to spot red flags and trust their instincts.”
Mark Lee, Founder, Tax Advice Network
Establishing transparent policies for ending client relationships upfront
The number one way to protect yourself is with a clear engagement letter that outlines your responsibilities, policies and processes, says Townsend.
“Very often clients start to become problematic because of an expectation gap.
“An engagement letter should include termination clauses that clarify the impact of disengagement on fees, any refundable amounts, notice period and your plan to get their books tidied up.”
It’s also important to keep meticulous records of all communication, she adds.
Lee says staff respect leaders who have the confidence to set hard boundaries.
“Staff need to know you’ll be firm with clients who are rude, inappropriate or unreasonable.”
Discussing difficult issues professionally
When a client relationship turns sour, it’s generally best to address the issue in person, relying on facts and maintaining a calm tone.
Townsend suggests using contrasts to clarify your stance.
“Start with saying what you want and don’t want to happen, and what you want them to take away versus not think about the experience.”
And be empathetic and curious, rather than defensive, she adds.
“Ask them about their own position and concerns. If a client requests a refund for lack of service, acknowledge their request empathetically. Then, probe deeper by asking, ‘What do you think are the root causes of this situation?’ This approach facilitates a more productive discussion.”
And be specific, says Pang.
“If there’s a pattern of late payments or scope creep, bring examples to the table rather than vague references. It keeps the discussion grounded and harder to dispute.”
Offboarding with goodwill and without backlash
If you’ve decided to part ways with a client, do so with professionalism and clarity, says Lee.
“Avoid accusations or debates, and focus on the next steps.”
Regardless of the rights and wrongs of the situation, the client may well feel upset by the situation. And it’s important to take the steps needed for a smooth handover to their next professional.
In a disengagement letter, Lee suggests explaining that you’re refocusing on specific client types and suggesting they find a new adviser. Specify the last tasks you’ll complete, with deadlines, and offer to provide necessary details to their new adviser to ensure they stay compliant.
Lee also recommends directing them to resources like the Tax Advice Network website to help them secure any specialist advice they might require.
But Lee urges accountants to remember that no-one should feel obliged to keep acting for bullies, abusive or problematic clients.
“You don’t have to put up with unreasonable behaviour. The longer you allow things to go on, the greater the risks to your mental health and wellbeing.”
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