How do accountants charge?
The traditional way of charging for accountants is by hourly rate. Accountant A quotes one hourly rate and accountant B quotes a slightly lower one. Simple, you go with accountant B because that’s going to be cheaper isn’t it? Not necessarily. You don’t know how quickly each of them can work so, if accountant A is a faster worker, possibly because of better technology, you could find that, even on this crude measure, accountant A is the lower cost option.
Hourly rates have other traps for the unwary. If the accountant is working on an hourly rate, is there any incentive to do the work quickly? If a mistake is made and has to be put right, the client is being charged an hourly rate so the cost of correcting the mistake can be passed on to the client – and this does happen. Most people wouldn’t accept an hourly rate quote from a builder or plumber without knowing how many hours to expect. Why should accountants be different?
Many, but not all, accountants do have a policy of only charging for the time which a job should have taken. They review each piece of work and, if it has taken longer than it should, possibly because of having to correct a mistake, only charge for the time the job should have taken. This does not apply to all accountants. I have come across situations where a client has pointed out mistakes to an accountant and then received a bill for “amending the accounts”.
In my opinion it is generally better to try to arrive at a price before starting the work. This is difficult with new clients because there is no previous knowledge of working with their records and, for a brand new business, no real information to go on, other than previous experience. We can be pretty definite about some types of work, such as payroll, and for other work we will give as accurate an estimate as possible, usually within a range. The principle we use is that, we will stay within the range unless there is something very different to what we expected and then we will discuss this with clients before proceeding. In about 95% of cases we are well within the indicated range. Once we have the first year’s work under our belts, we can be much more accurate in our pricing.
This method of estimating jobs allows clients to budget properly and, because we also offer a direct debit facility, spreads the cost, so no big bills.
Potential clients sometimes ask for a price based on the turnover of a business. This isn’t really relevant. A company can have a £million+ turnover derived from just a few transactions and keep immaculate records. They will be charged less than a company turning over £20,000 with a lot of transactions and poor records. The better the records you keep, the lower the cost is likely to be.
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KashFlow online accounting
Easy access and availability for accounting and bookkeeping are becoming more essential to ensure accurate and up to date information for businesses. The ability to see at a glance just how the business is performing means that owners feel much more confident. Online accounting is the solution.
When your accountant can also see your records and work on them at the same time as you, the whole accounting and bookkeeping process becomes much smoother and transparent.
One of the leaders, possibly the leader, in the online accounting market is KashFlow. We have decided to offer Kashflow as a service through our website, together with a special offer on the price. For more details have a look at this page.
