According to our guest Geraldine Carter of She Thinks Big Coaching, life is too short for holding on to bad clients. In this podcast, she discusses the signs that a client is more trouble than they are worth, the detriments to CPA firms if they hold on to nonbeneficial clients, and the psychological aspects that stand in the way when a CPA firm is considering dropping an engagement.

If you’d like, you can download this episode’s audio file. Additionally, you can follow us on iTunes, Google Play, or subscribe to our RSS feed.

Thank you to our sponsor: 



View sponsorship and commercial opportunity details.

By: Bill Hayes, Pennsylvania CPA Journal Managing Editor

Podcast Transcript

According to our guest today, Geraldine Carter of She Thinks Big Coaching, life is too short to work with bad clients. In this podcast, she'll discuss signs that a client may be more trouble than they're worth, ways CPA firms suffer if they hold onto detrimental relationships, and thoughts that get in the way of CPA firms deciding to disconnect with a bad client.

Is it common in your mind for CPAs to complain about clients, but then continue on working with them? What sort of strain would that create on their work lives?

[Carter] What I hear when I listen to CPAs, and when I also kind of listen at the wider level in Facebook groups and Slack channels and so on, is that there are CPAs – many CPAs – who have clients who are problematic. Those clients are complaining about any manner of things and the CPA is just frustrated with that client. So, it is really common.

The thing that is strange about this is that, if the CPA owns their business, the CPA has a choice about who they work with and who they don't work with. If you have problem clients, an important thing to remember is that you're in control of whether or not they're your client or not. The reason that some clients may be difficult or may complain could be because they're a difficult person, or it could be because they have legitimate problems or complaints about something that's going on.

For you as the business owner, it's your job to figure out which of those it is, and if they have legitimate complaints to actively solve those problems, which you want, because that'll make your business better. If the problem is, in fact, that they're just a difficult person and then anybody would have a hard time working with them, well, then knowing that would lead you to the conclusion that that's not a great client for your business.

Because really, at the end of the day, the cost to you when you have problem clients is that your best clients who are worthy of your best time and your best attention, your best thinking, miss out because you're over here busy dealing with a squeaky wheel. So, the real risk when you get caught up with problem and complaining clients is that your top clients could potentially defect, and that's the worst situation of all.

In what ways do CPAs benefit from finding better clients, and what are the signs that a client may be more trouble than they're worth?

[Carter] A great question, because finding better clients is the key to transforming your business from something that feels like a tax factory, where you're working 60-80 hours a week, haven't taken a vacation in 18 months, to a rewarding and profitable practice that you really enjoy and add value to your client's lives.

When you find better clients, I mean, the place that you need to start is to understand who are, in fact, you are best clients. That in itself can be difficult to discern if you're billing hourly because the answer to that question may appear as who do I work the most hours for? So you've got to figure out who, in fact, are your best clients, where can you provide the most value, where is the most potential value that you perhaps haven't tapped into and what qualities and characteristics do your best clients bring to you in a way that makes the partnership rewarding and valuable in both directions? It's only once you understand that that you can begin to replicate that by finding other clients who look just like that.

In answer to the second part of the question, signs that a client might be more trouble than it's worth, I would say the moment you have the question in your mind, "Is this client more trouble than they're worth," you already have your answer. If you're just asking yourself the question! Because, really, where the bar can be set and ought to be set is when looking at your client roster and you scan through them, you think to yourself and you believe it's true: "I have the best clients. They are amazing. I love working with these people. I can't believe how lucky I am." That's where the bar can be set.

Anything underneath that bar, you should take a hard look at and go, "Is this client really serving my business? Is this in my best interest? And, really, is this in the client's best interest?" Because sometimes disengaging with clients is good for the client, too, because they are then free to find a match that is a better fit for them.

We talked about the problem clients, but what in your view makes a great client, and does it change on a case-by-case basis? And, to come back to what you said at the end of your last answer, can a great client for one firm be a bad client for another? How's that dynamic work?

[Carter] This is important to talk about because there are different kinds of CPAs with different kinds of philosophies. Some of my own clients as CPAs will fight for every single penny, and there are some who have this vehemently stance. Then there are some who are super by-the-book and toe the line and believe in contributing and paying what's rightfully owed, so I don't have any right or wrong about that.

There are clients who fall into both of those camps as well, who have outlooks that mirror both of those stances. I've heard business owners say things to me like, "I want my business to be a walking tax deduction," and also had business owners say to me things like, "I want to pay my fair share. I believe in contributing to the greater good and I think my tax dollars are, for the most part, well spent." Again, I don't have any right or wrong about that, but you can hear business owners saying those kinds of things and having those different kinds of outlooks. If they are matched up with a CPA who has the opposite outlook, that's not going to be a great match and it's not going to be a great client.

In terms of the question, "What's my view of what makes a great client," I think the answer is more, "Who is the CPA? What beliefs and values do they espouse? What value can they provide and what are their best skill sets that they can lean into to create value for their clients?" Then, determine what kind of client becomes a great client out of those things. So, it's one great client for one CPA would be a terrible client for a different CPA and vice versa.

I'll just tell you a quick story. I have a half-day pricing workshop that I did recently with a client. It just kind of fell out of her mouth, and she goes, "I just don't want to work with people who obsess about detail." Some people love clients who obsess about detail, so you've got to know what works for you.

What we did was design a couple of questions that she can ask in the discovery phase to determine whether these are detail lovers or don't need to fuss about details. Then, screen them at the door so that she only brings in clients who want to stay focused on the big picture of growing their business, and then refer the other ones out to somebody who's a better match.

How does a CPA firm suffer if they hang onto a client that's not right for them?

[Carter]When a CPA firm hangs onto clients that are not great fits, everybody suffers. The firm suffers because now you have clients in your roster who are not great matches for CPAs. The CPA is grumbly, they're cranky about the client, their eyes roll. That CPA doesn't show up as their best person when serving that client, and that costs the firm. The CPA, the employee, if it's an employee CPA who's inside the firm, that CPA suffers. Right now, you've got a CPA who's an employee of yours, who's unhappy. Their engagement is reduced, which probably means their output is reduced. They probably waste your other employees’ time at the water cooler, complaining about this or that client and how outrageous it was they did this or that.

But the client also suffers, and there's nothing noble or benevolent about serving people who aren't a great fit for you. Like I said earlier, it's not great for the client either. They're better off having a great match for them. They deserve a great match for them because they've got a business that they care about, and they want a CPA who's going to show up as their best and serve them in the best way possible.

What sort of timeframe are we looking at when it comes to transitioning out a client that isn't working for you and bringing on new clients?

[Carter] Well, there are a lot of ways to skin this, and it depends on what you want and what you want to create and how fast do you want to do it. There are some people I work with who are just at their wits end. They have just come off of 18 months of one of the hardest experiences of their lives trying to maintain and keep everything moving and rolling. Those people are motivated and there's nothing that will stand in their way. If there are clients who need to be disengaged, they are actively disengaging them.

Most of the people that I'm working with right now are wrapping up 1040s, and as the 1040 goes out, or the business return, what have you, goes out, it is soon followed by a disengagement letter. We're not being cruel people. If you have more clients on your client roster than you can handle and serve, it is your responsibility to let them go. You're not doing anybody any favors when you've said yes to more than you can handle. I'm seeing a lot of CPAs, my clients included, wrapping up returns and disengaging so that they can focus on pivoting their business.

In terms of the overall timeline, you can transition your business in three to four months. You can do the meat, the bulk of the work, in that timeframe. It doesn't have to take 16, 24 months, especially if you're a solo where you're in charge of the decision-making and things don't go to committee. What I witness when I work with my one-on-one clients who get clear about the direction that they want to take their business is that in some bizarre way that I cannot explain, the universe shows up for them and starts to deliver them the exact kind of clients that they're looking for.

By way of example, I was working with somebody recently who niched into real estate, so he's got real estate investors with portfolios. After he made this decision to go in this direction, a week later, he emails me and he goes, "Geraldine, you're not going to believe what just happened." He said, "I just got two clients out of nowhere. Ideal prospect referrals. I have no idea where they came from or how they found me." I thought to myself, "That totally makes sense. I'm not surprised to be getting this email." But the next email to me was from a previous client who said to me, "Geraldine, I have this client who's amazing, but she's got a bunch of Airbnbs and a whole real estate portfolio, and I don't know what to do with her. Her stuff is way too complicated. Do you have anybody I can send her to?" Obviously, I made the match.

That's the stuff that happens that I see time and again when CPAs commit to a new direction, and it's clear who they want to be working with, the universe shows up, and it delivers in a way that is reliable, like a Swiss train.

What do you think gets in the way of CPAs making a choice to dispatch with a bad client? Is there a psychological aspect that comes into play?

[Carter] This is all a mind game because the logic says to never work with bad clients because it's bad business. The rest of this, therefore, must be mindset, belief that you've got to hang onto people, you have an obligation to serve them. "I can't let go of them now. It's terrible timing. They're not going to be able to find anybody else. All the other CPAs are all booked. Everybody's full. This is my mother-in-law's brother's sister's ex-boyfriend. I have to take care of them." I know that CPAs are logical, intelligent people, we know this, and yet there is absolutely a psychological aspect to this because there's no logical reason to hang onto clients that are just not good for your business.