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On the fence: charging for client onboarding

Imagine the scene: You’ve just secured a new client after weeks, perhaps months, of pitches, meetings, and demonstrations of your unmatched expertise. The handshake virtual or otherwise, is barely concluded before the thorny question arises: Should you charge for onboarding this new client?

In industries ranging from software to banking, the concept of a setup fee is as common as the coffee machine chat about last night’s football. Yet, in the world of professional services, particularly among accountants, the matter is as divisive as the age-old debate of whether pineapple belongs on pizza. A recent poll I ran on LinkedIn showed a split much closer than I imagined and some pretty strong feelings in the comments. So, what’s the deal with charging for onboarding?

What Exactly Is “Onboarding”?

First off, let’s nail down what we mean by “onboarding”. For many, it conjures images of paperwork ad nauseam: AML checks, professional clearances, setting up job codes, and the like. However, it’s more nuanced. Onboarding is the bedrock of your future relationship. It’s about understanding the client’s needs, aligning expectations, and setting the tone for the partnership ahead. It’s your first date, and you’re trying to ensure it’s not the last.

Setting up for success

So how do you make sure this first date is a success? Setting up a new client in an accounting firm is a nuanced process, involving a mixture of compliance, operational, and relationship-building steps. While the specifics can vary depending on the firm’s size and specialty the core process typically involves several key steps. Here’s a walkthrough of what it looks like (this is my own view of things), from initial contact to fully onboarded client:

1. Initial Contact and Needs Assessment

Engagement: The process kicks off with initial discussions to understand the prospective client’s business, needs, and specific accounting requirements. This can involve meetings, phone calls, or emails.

Assessment: The accountant evaluates the potential client’s financial situation, identifies the services they require (e.g., bookkeeping, tax planning, auditing), and discusses any immediate concerns or goals.

2. Proposal and Agreement

Proposal: Based on the initial assessment, the accountant or firm prepares a detailed proposal outlining the scope of services, the fees, and any other relevant terms.

Agreement: If the proposal is accepted, both parties sign an engagement letter or service agreement, formalising the scope of work, responsibilities, fees, and other critical terms.

3. Compliance Checks

AML (Anti-Money Laundering) Compliance: Accountants must perform due diligence to ensure they’re not aiding in money laundering. This involves verifying the client’s identity, understanding the nature of their business, and assessing the risk they pose.

Professional Clearance: If the client is switching from another accountant, professional courtesy requires the new accountant to contact the predecessor to ensure there are no ethical or professional reasons why the engagement shouldn’t proceed.

4. Client Onboarding

Data Collection: Gathering all necessary financial records, access to accounting software, and other pertinent information from the client.

*Software Setup: If using digital accounting tools or software, setting up accounts for the new client, including configuring any custom reporting or integrations they may need.

Team Introduction: Introducing the client to key team members who will be handling their account, setting the stage for effective communication.

5. Operational Setup

Job Setup: Creating job codes or project numbers specific to the client for time tracking and billing purposes.

Process Integration: Aligning the client’s financial processes with the firm’s practices, including invoicing, document handling, and communication protocols.

*Accounting System Integration: Ensuring the client’s existing accounting system is compatible with the firm’s systems or transitioning them to a new system if part of the service offering.

6. Initial Review and Planning

Financial Review: Conducting an initial review of the client’s financial statements and records to identify any immediate issues or opportunities.

Tax Planning: If applicable, beginning tax planning and compliance work, including registering for any necessary tax authorities, and planning for key dates and obligations.

7. Regular Communication and Check-Ins

Kick-Off Meeting: A formal meeting to mark the beginning of the working relationship, set expectations, and discuss any immediate next steps.

Ongoing Communication: Establishing a schedule for regular updates, reviews, and meetings to ensure the client’s needs are being met and to adjust the service offering as their business evolves.

8. Review and Feedback

Initial Feedback: After a set period, soliciting feedback from the client on the onboarding process and the services provided, allowing for adjustments as necessary.

This setup process is crucial not just for compliance and operational efficiency but also for building a strong, trusting relationship with the client. It’s an opportunity to demonstrate value, professionalism, and the foundation for a long-term partnership. Each step requires careful attention to detail and a proactive approach to addressing the client’s needs and concerns.

Whilst this is a substantial list a lot of these things can be ticked off quite easily through conversations with the client.

*These are items I would consider outside the scope of ‘onboarding’ and require an additional fee. They are added here as they are still a very important aspect of getting the client setup correct.

Setting the Tone: Pay for Quality?

Charging for onboarding can indeed set a precedent. It underscores a philosophy that nothing of value comes for free, framing the relationship on a foundation of mutual respect and investment. “You value what you pay for,” as the saying goes. But could this approach be as off-putting as receiving a bill at the end of a first date?

The Pros:

Value Acknowledgment: Charging highlights the value and effort put into the onboarding process, ensuring clients appreciate the behind-the-scenes work that goes into starting a fruitful relationship.

Resource Allocation: It compensates for the significant resources deployed in onboarding, from manpower to technology.

Client Commitment: A financial commitment from the client may also signify their engagement and investment in the relationship.

The Cons:

Barrier to Entry: Upfront charges could deter potential clients, especially startups or small businesses watching every penny.

Relationship Tone: It could set a transactional tone for the relationship, potentially undermining the trust and partnership ethos many firms strive to build.

Market Expectations: If competitors don’t charge for onboarding, it could place your firm at a competitive disadvantage.

Is It Typical in Other Industries?

Absolutely. Many SaaS companies, for instance, charge setup fees for their platforms. The difference? The tangible nature of software setup versus the more abstract concept of professional services onboarding.

A Reflection on the Future

Remember when fixed monthly invoicing was a novel concept? Now, it’s as standard as complaining about the weather. Could onboarding fees follow suit? As the professional services industry evolves, so too may its billing practices.

Software vendors own the narrative

One of my key concerns centres around the emerging trend of charging for “onboarding,” which appears to be heavily influenced by software vendors. The narrative, pushed predominantly by pricing and proposal software companies, positions these tools as the harbingers of a new era where automation and monetisation of client onboarding processes become the norm. Instead of personalised interactions that demonstrate our commitment and interest in a client’s business, we’re nudged towards replacing these crucial first impressions with automated emails, checklists, and portals. This shift commoditises client relationships right from the start, undermining the genuine connection that should be the foundation of our interactions.

The drive for pricing consistently and confidently replacing client care.

Personal Reflection

I confess, the term “monetising” client onboarding rubs me the wrong way. It feels a tad impersonal, akin to treating clients as subscribers rather than partners in a mutual journey. Perhaps it’s not the concept but the terminology that needs a refresh. “Investment in Partnership Establishment” anyone?

At the end of the day, whether to charge for onboarding is a strategic choice, reflecting a firm’s values, market positioning, and long-term vision for client relationships. Like any good debate, there’s no one-size-fits-all answer. But one thing’s for sure: the conversation around it is as engaging and complex as the world of accounting itself.

For further insights and varied perspectives on this topic, an enlightening discussion is unfolding on LinkedIn. Check out the post and join the conversation.

As the landscape of professional services continues to evolve, so too will the practices surrounding client onboarding. What remains constant is the pursuit of value, trust, and partnership that defines our industry. Whether or not that includes an onboarding fee is a chapter yet to be written in many firms’ playbooks.