Managing Scope Creep in Your Accounting Practice

Scope creep can have a negative impact on a firm’s profitability, but it can also be viewed as an opportunity to grow your Pennsylvania accounting or CPA firm. You have probably encountered some scope creep in services you offer:

• Monthly bookkeeping turns into financial consulting

• Tax return preparation becomes quarterly tax planning advice

• QuickBooks clean-ups and implementation include staff training and ongoing tech assistance

• Financial statement preparation leads to loan applications and lender meetings  

Scope creep means your client needs more services and trusts you to provide them. Your challenge is to ensure that the client is paying for those services.

Scope creep usually happens because clients ask for little things that seem easy enough to do to keep the client happy. But these little things can gradually multiply, eating up your time and resources, and before you know it, you’re offering significant services for which you’re not being paid.

If you’re already dealing with scope creep, you need to both address it with existing clients and prevent it in future clients.

Avoiding scope creep from the start

Scope creep can be minimized by having a very clear conversation with your new client and providing a detailed engagement letter. Discuss with your client the breadth of services they may need and what possible scenarios or changes may occur over the course of the project that could impact the cost and timeframe.

Once you and the client have a clear perspective on the services you will provide, create an engagement letter that specifically lists what is included and, equally importantly, what is not included. Work into the engagement letter the agreement that, should the scope of work increase by a certain agreed-upon amount (say, in the event that the client’s business grows significantly), the engagement letter will be renegotiated.

If you discussed a scenario that might require different services, for instance, if the client foresees making some investments or seeking venture capital or loans, make it clear in the agreement that any advice or support for any other services will be negotiated and addressed as a separate project under a new engagement letter.

You may also want to consider offering tiered services or specific packages that clearly define the exact services offered and their specific prices. Many clients prefer the clarity and predictability of a pre-defined package. This also gives them the opportunity to upgrade to a more comprehensive package as their needs expand.

Even if you charge by the hour, an engagement letter with clearly defined projects and parameters will be valuable, because your client probably has an expected budget. If you’ve had a discussion with the client up front about what your specific responsibilities are and how many hours it should take, when the client asks for something else, you can easily point out how that request will impact the hours you are charging.

Equally important to having these documents is to train your staff to follow them. Provide them with scripts or training on how to politely and positively address additional service requests. “Sure, we can help you with that! Let me check your agreement to see if that falls into our service package. If not, I’ll let you know what options are available.” Most clients will understand that language. Those who don’t may not be the kind of clients you want.

Adjusting scope creep in existing clients

Naturally, you will want to tread carefully with existing clients. Start by introducing these clear pricing policies to your new clients so you can work out the details and develop a powerful plan that most new clients will be comfortable with.

Simultaneously, when interacting with existing clients, gently introduce the fact that you are reexamining your pricing structure. You can honestly admit to past mistakes that allowed scope creep to overwhelm your agreed-upon services. Just giving them that heads-up can open up the discussion in a professional but friendly manner.

When you begin to roll out new pricing for existing clients, start with those who may be costing you money. If you are losing money on a client and the client isn’t willing to adjust, you will be saving money if that client decides to leave. You may also learn some effective ways to address the new pricing with your more valuable clients in the process.

Your good clients will understand that additional work requires additional fees. If they are not willing to pay, then you can renegotiate the services you offer them. If they choose to switch to a cheaper service, try to retain a positive relationship with them. Usually, your good clients who felt the need to leave will realize they were getting very good service from you, and your increased prices were probably worth it. They may even come back. At least, they will still have good things to say about you, and you will have the resources to replace them with clients who will know from the start what to expect from you and will be willing to pay for your expertise.