Thursday, August 07, 2008

Metrics for Firing a Client

The Journal of Accountancy published an article earlier this year that attorneys might want to consider as well.

Entitled "Letting Go: Evaluating and Firing Clients," it is written by Mark Koziel, CPA. The author observes that not every client is a good client, which is a sentiment I expressed in my book Courting Your Clients.

During these challenging economic times, it may make sense for a firm to prune their client list so that valued employee resources can be redirected away from low performing accounts and focused on higer value clients.

The AICPA Private Companies Practice Section (PCPS) offers guidance on how to evaluate accounts from a quantitative and qualitative perspective. Evaluation criteria include the following:
  1. Job Risk/Complexity
  2. Job Recovery/Profitability
  3. Referral Source/Client Tie-In
  4. Additional Potential Services
  5. Timeliness of Payment
  6. Client Satisfaction (meaning, how satisfied are YOU in working with this client?)
Once rated, accounts can be ranked from high ("A" accounts) to low ("D" accounts). The "D" accounts are candidates for dismissal, which must of course be handled very carefully.

A major reason that law and accounting firms don't want to lose clients is because a partner is frequently compensated based on revenue generation. Accordingly, some adjustments may be needed in incentive compensation calculations.

Read the full article here:

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