By now, I hope you've heard that we've declared the first Friday after May 15th and October 15th each year to each be National Fire Some Clients Day. We truly believe that firing clients can be both an immediate, emergency measure to make breathing room for both leadership and team members in your firm and it can be an ongoing business process that enables you to trim the bottom of your client base and make room for growth.

Firing clients symbolizes your firm's commitment to right-sizing your capacity after the Spring and Fall busy seasons. It shows that you’re willing to do something difficult to make life easier for your people. It is one of many business model adjustments we must make, and it is the easiest and fastest to execute in time to restore hope and faith in your people.

In this post, I've attempted to capture the questions you'll encounter from partners and staff as you drive this strategy forward and make client base trimming a regular business process. I've also drafted answers to give you a head start in developing an FAQ that can serve as a cornerstone for your firing clients communications plan internally. You can access these as a tool in our Firing Clients Toolset found here.

Internal Partner/Team Questions:

Why are we firing clients? Why is this important for our firm?

We are transitioning clients out of the firm to reduce the amount of work facing our people going into each busy season. Our commitment is to always align our capacity with our workload to avoid overwhelming and burning out our people. We also need to evaluate and trim clients to make room for leaders to undertake proactive initiatives to innovate and improve our overall business model. Perpetually upgrading our client base will enable us to be a progressive employer of choice, or destination workplace.

May NFSCD: Why are we focusing on firing clients in the Spring?

Coming out of the Spring busy season, our team will have interacted with virtually every client we have. It is an excellent time to evaluate our clients, identifying our best and also our worst. If their cycle of services is complete, it provides the clients we let go plenty of time to find an alternative provider. And, the room we make in our practice will open up capacity for proactivity and practice growth.

October NFSCD: Why are we focusing on firing clients in the Fall?

There is never a good time to let clients go, but we think Fall will be better than waiting until the holidays, or until the Spring cycle of services start. For tax clients, if we wait until Spring, many may be extended, and we’ll feel obligated to see that through. So, we’ve chosen to undertake a round of client culling in October.

How do we determine which clients to fire?

We will use a series of factors including clients that:

  • Don’t fit our minimum size or engagement fees for their service or industry
  • Are slow or no pay clients
  • Treat our people poorly by being diminishing, demeaning, grouchy, or mean
  • Insist that we serve them in some way that is outside our norm including not giving us digital files or “forcing” onsite or in-person services when we have moved to a more remote model
  • Debate billing, resist fee increases, and don’t seem to value our time
  • Are never ready, get their information to us very late in the cycle, whose workpapers or books are a mess, or something else that inhibits our profitability and quality of life working with them
  • Have poor realization – but only if we have confidence that realization is accurate in the firm (because people cheat realization by burying time and those clients may look better but are NOT actually better)
  • Increase our risk because of their industry, their practices, or because we’re dabbling in their services

Why can’t we just raise their fees, and some clients will naturally transition away from our firm?

Today, almost every CPA firm is transitioning clients out. There aren’t a lot of options for “bad” clients to go to, so they will pay a large fee increase from us and we will not free up capacity or relieve our people of clients that pain them. We must raise fees on all clients at least 10% this year to keep pace with inflation but raising client fees won’t cause clients to quit and is not an effective firing method.

What if the client has an outstanding invoice/hasn’t paid us yet for the services we completed?

We will offer to help our clients transition their files and services to another provider once their invoices are paid in full.

What template language do we have to leverage (e.g., emails, letters, phone call scripts)?

You can find the templates to help you explain the transition [INSERT YOUR LINK HERE].

How does firing clients affect my compensation/bonus?

We expect all client owners to participate in this work-reduction initiative, so we will take any fired client fees into account when calculating any goals. It is not intended to negatively impact anyone in terms of compensation.

How does firing clients affect my buyout if I’m a retiring partner?

FIRM LEADERSHIP NEEDS TO WRITE THIS ANSWER DEPENDING ON HOW RETIREMENT BENEFITS OR BUYOUT IS CALCULATED. In some rare cases, it will affect buyout values if the client base is largely useless to the firm, but this must be evaluated on a case-by-case basis. Ideally, you are trying to avoid a negative impact to the buyout so that everyone will participate.

How does firing clients impact my ability to build my book of business and be on the partner track?

We want you to be able to demonstrate that you can contribute to firm growth by sourcing and selling the right clients who fit our ideal targets. If we are slowing down new client sales and trimming the client base to make some breathing room for us, then this should not have a negative impact on your path to partner. This is something we should revisit in person to review your goals and discuss next steps as each person’s path to partner is unique.

What if the client doesn’t meet our “keep” criteria but they are a good referral source?

You will need to illustrate the specific referrals they made to the firm that were sold and DO FIT OUR IDEALS and then we can consider keeping them. Most people say this, but the truth is that we cannot demonstrate the reality of these referrals.

What if they are the sibling/spouse/in-law/cousin/etc. of a key client or partner in our firm?

We can evaluate these on a case-by-case basis, but if they are hard to work with, in any way negative towards our people or increase our risk, we will have a no exception policy toward them.

What if our competitors find out? How do we position this in the community, so we don’t get a bad reputation?

Our competitors will be in big trouble themselves if they are not undertaking a client reduction also, so this is not expected to be a “just us” thing. Even if we are the only ones among our competitors to fire clients, we can explain to prospects, referral sources and existing clients why this is crucial to our people and our firm and why this is an act of leadership, not a failure of some kind.

What if the client has been a loyal client for 20/30/40 years? Don’t we have an obligation to serve them? No, we do not have an obligation to serve anyone that doesn’t fit our criteria of a good, ongoing client we want to take into the future with us. While we want to honor our loyal clients, if they are too small, they will be better served by a smaller practitioner whose fees are likely more in line with the complexity of their work. If they are client who fits our “firing” criteria listed earlier in this document, then their longevity with our firm does not matter.

What if the client has potential?

You will need to illustrate the specific potential the client has and get buy-in from your Service Line leader to keep them. Most people say this to avoid the unpleasant task of letting a client go, but the truth is that the potential is limited.

How will firing clients impact our revenues and profits?

If we couple firing clients with fee increases to match rising costs AND we then are able to spend some more time with our most important clients, delivering more and better services to them, our revenues should grow, with the potential of fewer hours of work committed.

How will firing clients help us achieve our vision to focus and elevate the clients we serve?

When we trim from the bottom of our firm, much like trimming lower branches on a tree, it will allow us to grow “from the top,” adding more ideal target clients and going deeper with the 20% of the firm’s clients that make up 80% of our revenue. As a result, we expect this to drive our firm vision forward.

What if I just can’t do this. Can I get help firing the clients I need to fire?

Yes, we realize some of our people are super compassionate, harmony people who will feel physically ill delivering these messages or answering objections. As a result, we will aid those people. If you need this assistance, see [NAME OF PERSON]. But please be careful if you are not seriously anxious about doing this that you don’t use our offer of assistance as a way to get out of it, because we expect to have to support very few people in this process who fit these criteria. As leaders, sometimes we have to do hard things.

What if the client has a very negative reaction – how do we handle that and feel good about the client service we’re committed to delivering?

If you feel like a client conversation goes off the rails and you would like to circle back to that client and address their issues with assistance, please notify [NAME OF PERSON HERE]. The best way to handle this process is to share our “why” and get into the specifics of next steps, much like firing an employee. Keep the information limited and repeat it as necessary. It may help to say, “this is a very difficult process for us and for you. We are sorry that you are upset/disappointed/angry.” Or “we wish that people were more plentiful in our profession, but they are not. Instead, there is a great scarcity of talent, and we have to align our capacity with our headcount and protect the fine people we have from overwork and overwhelm. We are sorry you’re upset but hope you can understand.”

We know that letting clients go is never easy. But continuing to run our business at a capacity deficit, thereby burning out and turning over our valued people, is worse. Stop now and make this happen. Your people will both respect and thank you for it.