What makes a good client

There’s something like 5.5million SME businesses in the UK. To use another measure, there are approximately 2.72 million VAT registered businesses on these shores.

That’s an awful lot of potential clients for accountants. You would think that there would be some good ones in there for you.

Why is it that so many accounting firms end up with a significant proportion of ‘bad’ or ‘wrong’ clients who absorb the firm’s resources for little or no benefit?

Replacing bad clients with good ones positively changes the outlook and results for the accountant. Easier said than done, of course, but, to not replace bad with good causes serious harm and firmly shuts the door on progress.

A bad client doesn’t necessarily mean a bad person. A bad client can be a good client elsewhere but not the right fit for their existing accountant. I use the terms ‘good client’ and ‘bad client’ to make it a straightforward issue but we could just as easily talk about ‘good relationships’ and ‘bad relationships, ‘good fits’ and ‘bad fits’.

However we define it, working with a client where the relationship isn’t mutually beneficial isn’t a good place to be and the lack of slack in accounting firms today makes it a situation that should not be tolerated. It’s not just clients who have the right to take their business elsewhere!

To understand a bad client we need to recognise a good one. We will all have different ideas on what good looks like but, in general terms, a good client is one who:-

·     you and your team enjoy working with

·     is engaged in a business and sector that you understand

·     respects the terms of the engagement

·     reflects your values

·     is honest and open

·     listens to and values your advice and instructions

·     takes their responsibilities as a business owner and taxpayer seriously

·     is commercially viable for your business

In my mind, a bad client is one who fails any of the above, at least on more occasions than you are prepared to tolerate.

It’s that level of toleration that is quite often the issue, and a fundamental cause of accounting firms frustratingly not progressing. Most accountants can point out their bad clients, especially since a lot of the measures listed above are subjective, but often fail to do anything about it. The nature of the profession's recurring fee model works against the actions necessary. The client might be a complete pain (I’m being polite!) but its only once a year and at least it’s a fee.

It's not good enough. Because they absorb resources, every bad client is a block to so many valuable and essential steps:

·     better service for good clients

·     targeting new good clients

·     training and development

·     systems development

·     strategic thinking

In other words, bad clients stop the accountant doing the valuable things that will fix all of their sources of frustration and poor performance. The annual fee just isn’t worth the cost, however big it is (and I talk as someone who sacked their biggest fee-paying client because they were a bad client).

It’s wishful thinking that your firm will somehow morph over time to bring in good clients to swamp the bad ones. Bad clients suck the life out of a firm and have to be addressed.

I understand the commercial pressures but the critical step is to recognise who your bad clients are and to put them on your naughty list. This is the first step towards change.

By putting them onto your list, you are recognising that they are on their way out. You are also recognising that they are ranking below your good clients in your order of priorities. When and how you choose to remove them is now entirely within your power. Whether you choose to sack them now, price them out the firm, bundle them up and sell them (yes, this is a thing!) or remove them once they’ve paid their big fee for the year, you manage the process so that it minimises any short term commercial hit that you may take. My personal favourite was to sack one off the list every time we picked up a new good client.



Make 2025 the year when you no longer tolerate bad clients. You will be in such a better place by the end of it.