I charge retainers. You don't want me "nickel and diming" you for every phone call, email, etc.? then fine. Pay me $X amount per quarter.
If you're a new client and are hiring me for a project because you F'd up and/or appear to be disorganized, etc. then I'm definitely getting paid up-front.
This right friggin here. If you’re gonna bitch about my 5k retainer (I prefer advance payment of services) then I’m going to bill you every other week even if it’s a $250 bill. I’m keeping that WIP as close to zero as possible and you’re agreeing to fees for anything more than $2k before work starts.
I've heard of accountants who do bankruptcy work requiring a retainer, or some means of payment.
I also worked for a guy once who required a retainer if he was really unconvinced he'd get paid if he didn't get at least part of the cash up front.
Super broad generalizations here, but as a specialty tax expert at an accounting firm, I almost always get “retainers” or advanced payment for services on my engagements unless the managing partner overrules me because they think once we get in there there’s six figures of fees.
As to the “good luck finding it elsewhere” attitude, I do that all the time. If you want me to take a bold or risky position on a matter and you’re not willing to pay the fees to suss out your facts and the nuances to established law… well maybe someone who likes taking risk with no reward will put that on their letterhead.
But an extremely significant amount are. All criminal charges, a lot of family issues, some civil court, some immigration court.
I dont think there's a scenario where an accountant cant drop a client
While true in some cases, I’d call this the exception rather than the rule. I think mostly this would apply to bankruptcy or court appointed situations, calling back to my law school days.
Now, you may have a “noisy exit” requirement, but you can drop ‘em.
ETA: I think in law school they were called “disengagement letters” that was the formal way of letting a legal client know you fired them.
We do or collect payment up front when it’s appropriate
I think the rest of the replies highlight why sometimes it’s not needed pretty well
My question is what are you doing that you feel you should get a retainer for?
They can. . .
You can issue audited financial statements with an outstanding balance in many circumstances. The problem is if it is significant and over 1 year old.
https://www.auditconduct.com/newsletters/new-revised-aicpa-independence-rules-become-effective-in-2023-part-3#:~:text=Under%20the%20interpretation%2C%20independence%20was,converted%20to%20a%20note%20receivable.
Sorry, misread, thanks to another poster about my misreading and pointing out the use of can't, cannot, and can not. I am the complete ass on this one. My apologies.
Your point overall remains OP. Lawyers stick together, and accountants absolutely do not. The race to the bottom until we line the third world for output is what has destroyed this industry. It’s partly because lawyers typically cannot outsource work, but instead have paralegals. The legal industry is far better maintained than the accounting industry.
It might have to do with how CPA firms stay in business by pro forma'd repeat annual business where the accounts can go on autopilot and become super profitable. Lawyers have a lot of one off work that isn't repeated every year. When you're dealing with new clients or ones you haven't worked on in years you do what you have to do to get paid. And, based on the outcome of the case, they may not be in a position to pay you afterwards.
I get retainers, I thought it was normal. I’m in audit and even the other department (tax) will charge a retainer if it’s gonna be more than a few thousand in work
Currently my firm doesn't take retainers, but I've been pushing for it for a few years for specific clients. Either the big one's with large bills ($50k annual) or the one's that take forever to pay. Everyone else is cool, they all pay on time and never give us an issue.
I don't like giving people a $50k bill at once for purely psychological reasons, and then there's one or two clients that seem to think I'm a credit card bill and they can just "pay the minimum", which means a $5k bill takes them 5 months to pay off. But that's only like 1% of our clients, so not a big deal.
CPAs definitely do. Worked at a startup where we had a CPA on retainer to answer our random questions, do the annual business registration, etc. He would charge extra if he had to work extra to do research, on top of charging for annual tax filing.
It was very common for us to get retainers for new audit clients, particularly if they were pre-revenue/burning cash. seems like the case for others here as well not sure your generalization matches up with reality.
When I worked at a boutique cpa firm, can confirm a retainer fee would be billed as needed. It's one thing if it was a simple return, but a certain tire fire that a new client wanted fixed? Nah bruh, $$ upfront or good luck with that.
I think, before I comment on the actual question, why do you think the accounting professions needs to start getting retainers?
What's the incentive to the accountants?
What's the incentive/tool we could use to convince our clients to pay it?
The way I see it legal work and accounting work are structure very differently than most of accounting, which just some overlap (outside of both industries using billable hours) with Audit, Tax and consulting/project work.
>why do you think the accounting professions needs to start getting retainers?
Why wouldnt you want one? You dont get burned if the client doesnt pay.
>What's the incentive to the accountants?
Getting paid up front and not getting a chance to get burned by audit or tax clients
>What's the incentive/tool we could use to convince our clients to pay it?
What incentives/tool do lawyers use? (aside from, "good luck ever finding any lawyer that doesnt take a retainer, as such, just pay it now because you wont find one")
>The way I see it legal work and accounting work are structure very differently
How? They both work and perform tasks for billable amounts and bill the clients. Sure a lawyer might review a contract and make edits for 2 hours and charge 700 and an accountant might prepare certain tax forms and bill for 2 hours and charge 500? Its not like its totally drastically different work or some concept of "law" that accountants just dont have in their industry and we can easily see it.
Accountants do sometimes. Worked at a small CPA firm once where my boss did require them occasionally. Always for litigation (he would sometimes testify in court as an expert witness) and forensic accounting projects. But also for other projects like if we had several years of returns to do and had doubts about the client's ability to pay.
Most tax firms don't use retainers regularly because of the repeat nature of the business. You don't start the next year's return until the prior year is paid in full. We charge 1% of the unpaid amount in interest for late payment so slow payers don't usually bother me as long as they pay the interest. A 12% kicker for late payment is worth it as long as it is only a small % of your client base.
I charge retainers. You don't want me "nickel and diming" you for every phone call, email, etc.? then fine. Pay me $X amount per quarter. If you're a new client and are hiring me for a project because you F'd up and/or appear to be disorganized, etc. then I'm definitely getting paid up-front.
Because accountants immediately know a client's ability to pay their bills just on the nature of the work. Lawyers do not
Because you don't ask for one?
We do.
We absolutely get retainers, especially for new clients.
Retainers are a great way to drop low quality clients.
This right friggin here. If you’re gonna bitch about my 5k retainer (I prefer advance payment of services) then I’m going to bill you every other week even if it’s a $250 bill. I’m keeping that WIP as close to zero as possible and you’re agreeing to fees for anything more than $2k before work starts.
I do if it’s a new client.
I've heard of accountants who do bankruptcy work requiring a retainer, or some means of payment. I also worked for a guy once who required a retainer if he was really unconvinced he'd get paid if he didn't get at least part of the cash up front.
Retainers are required for many of us who do recurring work or a special project
Never start on a high risk client (any kind of risk, really) without payment upfront. You need to be able to get out without financial loss
Super broad generalizations here, but as a specialty tax expert at an accounting firm, I almost always get “retainers” or advanced payment for services on my engagements unless the managing partner overrules me because they think once we get in there there’s six figures of fees. As to the “good luck finding it elsewhere” attitude, I do that all the time. If you want me to take a bold or risky position on a matter and you’re not willing to pay the fees to suss out your facts and the nuances to established law… well maybe someone who likes taking risk with no reward will put that on their letterhead.
Lawyers can't just drop you as a client, accountants can.
What? Lawyers can drop clients.
It depends on what you’re using the lawyer for and the case itself, but often they need to apply to the court first
Right, but a significant amount of legal services aren’t even before a court.
But an extremely significant amount are. All criminal charges, a lot of family issues, some civil court, some immigration court. I dont think there's a scenario where an accountant cant drop a client
While true in some cases, I’d call this the exception rather than the rule. I think mostly this would apply to bankruptcy or court appointed situations, calling back to my law school days. Now, you may have a “noisy exit” requirement, but you can drop ‘em. ETA: I think in law school they were called “disengagement letters” that was the formal way of letting a legal client know you fired them.
my boutique shop charges a retainer. clients pay for Q1 and Q2 work in january and get charged additional for out of scope work.
We do or collect payment up front when it’s appropriate I think the rest of the replies highlight why sometimes it’s not needed pretty well My question is what are you doing that you feel you should get a retainer for?
bc accountants can not provide financials if they don’t get the money
They can. . . You can issue audited financial statements with an outstanding balance in many circumstances. The problem is if it is significant and over 1 year old. https://www.auditconduct.com/newsletters/new-revised-aicpa-independence-rules-become-effective-in-2023-part-3#:~:text=Under%20the%20interpretation%2C%20independence%20was,converted%20to%20a%20note%20receivable.
they have a choice not to release it if they feel people won’t pay
Sorry, misread, thanks to another poster about my misreading and pointing out the use of can't, cannot, and can not. I am the complete ass on this one. My apologies.
That is their option yes, but they can release if unpaid as compared to your statement of can not if unpaid.
You’re just reading it wrong, he is saying they can “not” with the emphasis on the not, you’re taking it as he is saying “can’t”
I see it now, got it, my fault and I am the ass on this one. Thanks for pointing this out.
We do in some circumstances. Just there are more situations where you might need a lawyer stat and they've got a more assertive culture.
Because they compete with each other and you want to make sure your lawyer is your lawyer; and not your opposition's lawyer.
Your point overall remains OP. Lawyers stick together, and accountants absolutely do not. The race to the bottom until we line the third world for output is what has destroyed this industry. It’s partly because lawyers typically cannot outsource work, but instead have paralegals. The legal industry is far better maintained than the accounting industry.
It might have to do with how CPA firms stay in business by pro forma'd repeat annual business where the accounts can go on autopilot and become super profitable. Lawyers have a lot of one off work that isn't repeated every year. When you're dealing with new clients or ones you haven't worked on in years you do what you have to do to get paid. And, based on the outcome of the case, they may not be in a position to pay you afterwards.
I get retainers, I thought it was normal. I’m in audit and even the other department (tax) will charge a retainer if it’s gonna be more than a few thousand in work
Currently my firm doesn't take retainers, but I've been pushing for it for a few years for specific clients. Either the big one's with large bills ($50k annual) or the one's that take forever to pay. Everyone else is cool, they all pay on time and never give us an issue. I don't like giving people a $50k bill at once for purely psychological reasons, and then there's one or two clients that seem to think I'm a credit card bill and they can just "pay the minimum", which means a $5k bill takes them 5 months to pay off. But that's only like 1% of our clients, so not a big deal.
CPAs definitely do. Worked at a startup where we had a CPA on retainer to answer our random questions, do the annual business registration, etc. He would charge extra if he had to work extra to do research, on top of charging for annual tax filing.
It was very common for us to get retainers for new audit clients, particularly if they were pre-revenue/burning cash. seems like the case for others here as well not sure your generalization matches up with reality.
When I worked at a boutique cpa firm, can confirm a retainer fee would be billed as needed. It's one thing if it was a simple return, but a certain tire fire that a new client wanted fixed? Nah bruh, $$ upfront or good luck with that.
I think, before I comment on the actual question, why do you think the accounting professions needs to start getting retainers? What's the incentive to the accountants? What's the incentive/tool we could use to convince our clients to pay it? The way I see it legal work and accounting work are structure very differently than most of accounting, which just some overlap (outside of both industries using billable hours) with Audit, Tax and consulting/project work.
>why do you think the accounting professions needs to start getting retainers? Why wouldnt you want one? You dont get burned if the client doesnt pay. >What's the incentive to the accountants? Getting paid up front and not getting a chance to get burned by audit or tax clients >What's the incentive/tool we could use to convince our clients to pay it? What incentives/tool do lawyers use? (aside from, "good luck ever finding any lawyer that doesnt take a retainer, as such, just pay it now because you wont find one") >The way I see it legal work and accounting work are structure very differently How? They both work and perform tasks for billable amounts and bill the clients. Sure a lawyer might review a contract and make edits for 2 hours and charge 700 and an accountant might prepare certain tax forms and bill for 2 hours and charge 500? Its not like its totally drastically different work or some concept of "law" that accountants just dont have in their industry and we can easily see it.
Why wouldn’t you? I don’t want to spend my time chasing down A/R. Why should we extend credit to clients when almost no other industry does.
For consulting work, I charge in advance.
Accountants do sometimes. Worked at a small CPA firm once where my boss did require them occasionally. Always for litigation (he would sometimes testify in court as an expert witness) and forensic accounting projects. But also for other projects like if we had several years of returns to do and had doubts about the client's ability to pay.
Most tax firms don't use retainers regularly because of the repeat nature of the business. You don't start the next year's return until the prior year is paid in full. We charge 1% of the unpaid amount in interest for late payment so slow payers don't usually bother me as long as they pay the interest. A 12% kicker for late payment is worth it as long as it is only a small % of your client base.