How to disengage clients right after tax season

You know some of your clients just.need.to.go, but you don’t know how to let go of them. Some are difficult to deal with, but you don’t have the words to disengage them graciously. Some clients are not profitable, but you allow them to hang on because you don’t have anywhere else for them to go, while others were among your first, helped you launch your tax and accounting practice, and you feel loyal to them. There are some you simply don’t enjoy having, but you need the revenue … and then there are the “little old ladies”—you just don’t have the heart to let them go.

Does this sound familiar? If so, your practice may be cracking under the weight of beyond-capacity work. Your staff is overworked, and you worry about how much longer they’ll hang on. You’re overworked, but as the owner, you don’t get to complain.

You want desperately to get off the hamster wheel, but just can’t see the path to working less, especially when clients = revenue—and you need the revenue to pay your staff to do the work.

It feels like a trap.

It seems counterintuitive, but the pathway is through disengaging clients. Disengaging is the only way out.

Won’t I just be trading clients to maintain revenue, which will keep workload the same?

As your tax and accounting practice grows and changes, so do your clients’ businesses. Some may outgrow you, just as you may outgrow them. The goal is to shed the ones you’ve outgrown, and replace them with Ideal Clients who have a higher margin and will be less needy; in turn, this will reduce your workload.

Your practice benefits when you disengage non-fit and beyond-capacity clients. You have more time to create and deliver value for your best clients. You have time to optimize systems, train staff, and get more of your time back.

The Five Bucket Challenge

Disengaging clients is a simple, step-wise process. Beginning with your client roster, create five columns, and in less than five minutes, put each client’s name into one column:

1. Definitely Keep.
2. Likely Keep.
3. Not Sure Yet.
4. Likely Let Go.
5. Definitely Let Go.

Avoid having perfect answers. Rather, you want to generate a clear list of your very best and worst clients.

Begin with a segment of the worst clients. Most of the accountants I work with do a preliminary round and disengage 10%. We want to get a feel for the response, and deal with the small handful of clients who have remaining needs that need closing out. We use the response to improve the template Disengagement Letter (see editor’s note below) and other internal systems.

Three weeks later, we do a second round of disengagements, which typically results in disengaging another 10-15%.

But you’re crazy to cut all that revenue!

While we are disengaging clients, we are also talking to the best clients about their needs. We are designing higher-value, higher-priced, higher-margin services to offer them. The response to this a nearly universal: “How soon can we start?!” When offered a tiered option of higher-value services, most clients will choose the middle option; higher-margin revenue is coming when you have time and space to create it.

Repeat the process from both sides

Reshaping a client roster so you are working with clients you enjoy and have a high margin can be a 4- to 8-month process depending on how far beyond capacity you’ve already gotten. It may require four rounds of disengaging to allow time to convert your existing best clients into higher-level options. Be sure to always manage to cash flow to stay out of money scarcity.

You mean I’m going to cut 40% of my client roster?!

Maybe. Remember that if you are working a 70-hour week, disengaging 20% of your workload still has you working a 56-hour week.

There is no single right way to do it.

I worked with a tax-heavy CPA who had 1,000 clients. Over eight months, she disengaged more than 300 clients. She now has 240 hours less work on her plate, and her take-home pay doubled because she had capacity to take on high-margin advisory work.

Another client was frustrated doing in-the-weeds tax; she wanted to be doing higher-level fractional CFO work for a hand-selected set of business owners. Over six months, she disengaged more than 600 annual tax clients and kept a few dozen of her best who wanted a fractional CFO. Her revenue and take-home pay are the same, but she now leaves the office at 5 pm and no longer works on weekends.

But that sounds risky!

Some accountants think of themselves as risk averse, but consider risk from alternate points of view:

• The too-busy accountant risks not providing the result the client has paid for.
• The overworked accountant risks burning out and throwing in the towel on one of life’s biggest assets.
• The overburdened accountant risks losing time to repeat inefficiencies and spinning.
• The stressed accountant risks their health.
• The inaccessible accountant risks losing their best clients.
• The accountant who won’t get rid of bad clients risks losing their best clients.
• The heads-down accountant risks being unavailable for better opportunities.
• The people-pleasing accountant risks being unhappy in their accounting firm.
• The accountant who refuses to fire rude clients risks staff quitting.

The result? Beyond-capacity accountants are running a risky business!

What could go wrong?

It can be tempting to use “driving up the price” as a way to push clients out. Be cautious of using price increases as a disengagement strategy.

If you don’t know how price sensitive your clients are, you risk increasing your prices with most of your clients staying. This may improve revenue, but it will not solve the overworking problem.

Where do I start?

1. Determine your firm’s existing capacity.
2. Determine the actual amount of work/time currently required to serve existing clients.
3. Fill out your Five Bucket Challenge.
4. Use the Template Disengagement Letter to disengage clients who exceed capacity.
5. Meanwhile, begin offering higher-value services to a segment of B clients.
6. Observe results of both and adjust as needed.
7. Repeat until you have reshaped your client roster to your liking.

You can run a calm, high-margin accounting firm. It only takes committing to the process of reshaping your client roster.

Editor’s note: Geraldine Carter has kindly provided sample template engagement letters as a downloadable PDF or at a Google Doc link.