It’s not me, it’s you: How to fire a bad client (politely)

Most of your clients are probably great. They give you interesting projects; they learn and adapt based on your recommendations; they teach you new things and allow you to grow and challenge yourself. However, inevitably in business, you’ll come across clients who are difficult to work with, writes David New, Ignition, Head of APAC.

When a client becomes a bigger hassle than the money they bring in is worth to you, it may be time to make the tough call and end the client relationship.

However, not all clients are a lost cause, so it’s important to know when the client relationship is salvageable and take steps to resolving the issue together, before saying your goodbyes.

Is the client relationship salvageable? 

Where there are challenges in the client relationship, there are also often opportunities, and having an open and honest conversation with your client could save the relationship. It’s worth a try, simply because the cost of acquiring a new client is five times higher than the cost of retaining one.

Your first port of call should be returning to your contract or engagement letter to ensure all reasonable efforts have been made to achieve your deliverables. Here, you can snuff out roadblocks to certain goals and establish what should be raised with your client.

Take, for instance, inconsistent communication. When a client is failing to get back to you and not providing required documents or information, you could begin by establishing clear expectations and timeframes and demonstrate that work can’t progress until they’ve been met.

No doubt, these conversations are tricky to manoeuvre and at times plain awkward, but avoiding them comes at a cost. According to recent research by Ignition, 43 per cent of accountants and bookkeepers said their mental health has suffered by avoiding or delaying these awkward conversations with their clients.

How to identify a bad client 

There’s no rule of thumb as to whether a client relationship needs to end. Sometimes, it’s not even a hard business reason – for example, you’re unhappy with the way the client speaks to you and your team. In fact, a lot of the time, the final decision can come down to a gut feeling. However, one tell-tale sign that the time has come to end the relationship is if a client’s habits start to impact your profits.

• Are they consistently making late payments or pushing back on deadlines?
• Is incessant scope creep chewing up your staff’s time for other clients?
• Maybe your client is unsure of what they want and procrastinates to the point where deadlines are missed.
• It may be the reverse – your client thinks they’re the expert and you find your work bearing no resemblance to the thoughtfully designed project that was initially conceived.

Either way, consistently losing money on a client is an altruistic act you can’t afford. In fact, our research suggests accounting firms could be losing out on $103,778 each year from unpaid overtime.

How to fire a client: The approach 

Depending on the problem you have with your client, there are several different ways you can end the business relationship. Ultimately, though, the real art of firing a client lies in your explanation.

The straight talk

When the scope of the project has changed drastically from what was originally agreed upon, you’ve got a great opportunity to save face by explaining that you and your client just aren’t a good fit.

It helps to suggest another business that you feel could deliver according to their needs. By providing a thoughtful referral, it shows that you bear no ill-will and leaves the door open for a future working relationship.

The excuse 

Even if you want to bluntly lay down the difficulties you’re facing with a client, sometimes you know that just won’t work. Instead, a convenient excuse will enable you to exit the relationship without confrontation. For instance, you could tell them that your company is moving in a strategic direction – which means closing off some current accounts. By sparing your client’s emotions, you can avoid a negative review.

The fee increase 

If you’re firing a client purely because of the numbers, increasing fees or adding additional charges for excessive support or administration requests could actually solve the problem. The client may even agree to the increased charges if you communicate how it will enable you to continue to deliver on their needs. If not, you can shift your focus to bringing in more profitable clients who have a larger budget.

Get on the same page with clients right from the start

Terminating a client relationship is never easy, but it’s an opportunity to fine-tune your client engagement experience. It’s an opportunity to set up new client relationships for success, right from the start.

For example, set clear expectations on your service and value, and stop over-service before it starts. Automating these client onboarding processes is a good way to ensure nothing slips through the cracks.

It’s also an opportune time to evaluate your pricing. By making a habit of assessing your fees annually, you can develop fee structures that give you a little more wiggle room to avoid absorbing out-of-scope costs. You can eliminate client friction by automating payment collection to minimise chances of non or late payments.

At the end of the day, we all deal with bad clients. The key is to identify the bad ones early and plan an exit strategy that lets you leave with your integrity intact. For the good ones, clarity on objectives, scope and expected value and service, and regular communication is critical to spark long-lasting relationships.

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