Reply to: Accountants with good deals for Dormant Ltd companies?

[Sam B Dynamo Accounts]

I don't normally agree with Alan, but on this occasion I do.

I see no benefit (from an accountants point of view) to offer a discount on fees paid early unless cash flow is an issue.

Seems strange to reduce profit and I can't honestly believe such a small discount to client is such an incentive!

I have come across this before from a clients point of view having received a request for an annual up front bill (without asking for a discount) - he wanted to be sure all his commitments for the coming year were addressed so he knew where he stood.

It wasn't about wanting cheaper services or our attempt to win work by reducing profits or a 'cash grab'.

So maybe the slight reduction isn't the incentive here but just a bonus for some - maybe there are lots of people like my client that need to be so organised and in front.

[pr1]

I don't normally agree with Alan, but on this occasion I do.

I see no benefit (from an accountants point of view) to offer a discount on fees paid early unless cash flow is an issue.

It might be the difference between someone choosing/staying with you or moving to someone else

[craigy1874]

I don't normally agree with Alan, but on this occasion I do.

I see no benefit (from an accountants point of view) to offer a discount on fees paid early unless cash flow is an issue.

Seems strange to reduce profit and I can't honestly believe such a small discount to client is such an incentive!

[Maslins]

Hmmm...given what happened to Nimble Jack (NJ) a year or so ago, I'd be nervous re paying a year in advance as a client unless I was very confident in the future of the firm.

NJ clients typically found they'd made multiple monthly payments, then accounting firm went AWOL. Client then realistically has to find a new accountant, get them to pick up the pieces (possibly charging a premium for it), with no likelihood of a refund from NJ. It would have been even worse had the client paid NJ a whole year's fees in advance.

It does beg the question why would an accountancy firm offer this? As Alan suggests, it's a temporary cash flow boost at the expense of profit over the longer term. If as a firm you're confident in your future, it's daft. To my mind it only makes good business sense to offer if you're struggling and need bailing out, or perhaps you think the client would leave without the offer.

...but yeah, re the OP, there seems to be a lot of confusion in contracting circles over what "dormant" means. Having a brief gap between contracts does not make your company dormant.

[pr1]

Not true.

I am joining said accountancy firm, and year end accounts to be done after three monthly payments....

Good to know they offer 10% off if paid up front - once I'm up and running again will certainly take advantage of said offer.

Ok yes as a "please join us" welcome bonus, don't expect them to do next years with only three monthly payments - I am referring to the medium/long term

[fiisch]

Gorilla



You may be right - time will tell I guess but when [almost?] every accountant will demand 12 monthly payments before they'll do your end of year accounts etc IMO it's silly not to take 10% off if it's offered!

Not true.

I am joining said accountancy firm, and year end accounts to be done after three monthly payments....

Good to know they offer 10% off if paid up front - once I'm up and running again will certainly take advantage of said offer.

[pr1]

Can I ask who it was?

Gorilla.

I’m sure they dressed it up as a great benefit to the client but it does sound like a cash grab to me. Sacrificing profit for cash in the bank seems strange, and maybe a bit worrying, especially when the monthly model creates positive cash flow anyway.

You may be right - time will tell I guess but when [almost?] every accountant will demand 12 monthly payments before they'll do your end of year accounts etc IMO it's silly not to take 10% off if it's offered!

[Alan @ BroomeAffinity]

and thanks to one of your competitors for advertising it openly and emailing all their clients explicitly offering it

Can I ask who it was? I’m sure they dressed it up as a great benefit to the client but it does sound like a cash grab to me. Sacrificing profit for cash in the bank seems strange, and maybe a bit worrying, especially when the monthly model creates positive cash flow anyway.

[pr1]

On the back of this, I did a quick straw poll on LinkedIn and, while definitely not enough respondents to make it comprehensive, 2 out of every 3 said they’d pay up front for 10% off. So it may be something we’ll look at. Thanks for planting the seed.

and thanks to one of your competitors for advertising it openly and emailing all their clients explicitly offering it

[Alan @ BroomeAffinity]

surely would be better to advertise then?
I'd pay a full year up front for 10% discount.

On the back of this, I did a quick straw poll on LinkedIn and, while definitely not enough respondents to make it comprehensive, 2 out of every 3 said they’d pay up front for 10% off. So it may be something we’ll look at. Thanks for planting the seed.

[WTFH]

Because I don't have a contract currently but hope to get one sorted soon.

OK, your company is not "dormant" and it is not "not trading". You are between contracts.

[Alan @ BroomeAffinity]

Understand and agree, but unless I'm going cross eyes shouldn't there be a don't in there, "to understand that accountants don't only work when you do"?

Indeed. Fixed. Thanks.

[Jessica@WhiteFieldTax]

Sorry I didn't specify. It's currently not trading. It's not officially dormant (I think there's some bureaucracy involved in doing that).

Its not so much bureaucracy, as time. The definition of trading is "no significant transactions" - that means in the current financial year you can't be dormant as you've been trading, and neither can the company be dormant in the following year as you'll have a tax bill to settle. It takes to the end of the accounting period after next.

[Jessica@WhiteFieldTax]

There does seem to be a general failure among some contractors to understand that accountants only work when you do. Most of the work we do is on an annual cycle and therefore whether you are benched or not is largely irrelevant. We've had contractors stop their DD to us because they're between contracts. It doesn't work like that. The monthly fee is essentially an annual fee payable in twelve instalments. Although that could possibly be communicated better.

Understand and agree, but unless I'm going cross eyes shouldn't there be a don't in there, "to understand that accountants don't only work when you do"?

[gts]

Are you "Not trading" because you don't have a contract currently but may do in the future, or are you not trading because you do not intend to go back to contracting?

Because I don't have a contract currently but hope to get one sorted soon.