Nobody likes an awkward conversation. Telling your client that what you're doing for them is not what you initially signed up for, that the scope has changed and therefore the cost has too... Yeah, that's not a comfortable discussion. So is speaking about pricing in the first place... Or getting clients to pay you when they are way overdue...

You may be tempted to delay or avoid these conversations altogether. But I'm going to tell you 1) why that's a bad idea and 2) how to make these tough conversations a little less painful.

Ignition conducted research for their "2022 State of Client Engagement" report, interviewing 506 key decision makers in accounting and bookkeeping firms with 1-50 employees in the US. The report found that pretty much all of the accountants and bookkeepers that were surveyed (94%) have had awkward situations with their clients including:

To put it plainly, out-of-scope work is costing US accounting and bookkeeping practices an average of $76,636 each year, with 9 in 10 accountants and bookkeepers in the US delaying or avoiding awkward conversations with clients.

Despite this, 68% of respondents claimed to be trying to improve or maintain client relationships. Here's the rub - you can't maintain a good relationship if it's one-sided, which it inevitably is if it's only serving your client and not you. To have a good relationship, it needs to work both ways, which means you need to be able to have some difficult conversations.

The survey found that nearly 40% of accountants and bookkeepers surveyed are concerned that their clients will respond negatively to such conversations, while 34% said that they lacked the information needed to agree upon the scope, and 34% also said that they lacked the necessary negotiation skills.

But this isn't like when you pretend not to see your old high school classmates at the mall so as to avoid awkward catchup conversations. This avoidance has significant financial repercussions from the loss of potential income to cash flow issues and even partial business shutdowns. And, as Accounting Web editor, Seth Fineberg, writes:

"By avoiding or delaying awkward client conversations, survey respondents reported detrimental implications for personal and team health and well-being."

Avoiding these tricky conversations oftentimes leads to a loss of morale, an increase in feelings of resentment, an overall negative impact on mental health, and can even lead to staff members resigning!

So, what can be done? I have five tips for you to make the tough conversations a little less daunting, plus, if you reach tip 5, you'll find an awesome downloadable cheat sheet to help you out with some tricky emails!

Establish what your client expects from the get-go. Don't start your work without a signed engagement letter that ensures that you and your clients are on the same page in terms of what's expected.

If there's an additional service - or it turns out they have way more transactions to deal with than they let on - then address this as soon as you realize. Inevitably, there are times when unexpected things happen and requirements change. You need to make it clear from the start that if your client's requirements change, so will the time it takes for you to do your work and, consequently, the amount you will charge them will change too.

Make sure that you communicate any changes to your clients as soon as they appear. You can then send them an updated engagement letter so that everything is there for them to see in black and white and nothing is left unsaid. The worst thing you can do is assume that they understand changing requirements or costs.

If your client asks for an additional service without the additional cost, you need to make it clear to them that you don't work for free. You don't need to be rude about this though. If they make a request that is out of scope, politely let them know that you are happy to do this for them, but as it isn't within your original plans, you will need to write up a new engagement letter and they will need to pay more than you originally agreed on.

Ultimately, you need to be consistent in order to not appear rude or unreasonable. If you stick to the same principles across your client base and across your time communicating with a specific client, then it becomes apparent that this is simply how you run your practice.

You're not being stingy; you're sticking to the guidelines you have always used.

This is where bundling your services can be really helpful. If you offer three different packages, say a Bronze, Silver, and Gold package, then you can point new clients in the direction of the package that best suits their needs. For example, let's say these are the packages you offer:

A client may come in wanting bookkeeping, tax returns, payroll, and management accounts. You can then let them know about your Silver package and its standard cost and tell them that they can also get budgeting services on top of the other services they require because it's standard in this package. If, at some stage, they require forecasting services, you can then let them know that this is part of the Gold package and they will need to change to this package (with its associated cost) to avail of those services.

It's also good to get the topic of pricing out in the open from Day One. A new client might have no idea how much a certain service is worth and you need to let them know straight away so that they don't get to the point of receiving your invoice and then decide that you're too expensive and they don't want to pay you. For more ideas on how to charge your true worth, we share some insights here.

The first tip here is to ensure that you agree to a preferred invoice payment method upfront - before it's a problem. Make sure that you know exactly who should receive the invoice and how they would like to pay. Give them a few payment options to make the process more convenient.

Make it clear on the invoice what your client is paying for and what your payment terms and due date for the payment are.

Remind clients a week before the payment due date that they need to pay you in a week. This makes it less likely that they will forget.

When payments are late, make sure you have a system in place to address this, such as an email template.

Unfortunately, I can't guarantee that you'll never have another uncomfortable conversation with a client ever again. I really wish that I could. But, what I can guarantee is that, over time and with practice, you can get much better at having these conversations and they will eventually begin to feel a bit more bearable.

Ultimately, you need to be able to have difficult conversations with clients because not having them can have a significant impact on your bottom line - not to mention your own stress levels. If you keep these tips front of mind, you'll be well on your way to clearing things up before they become issues, avoiding scope creep, and accelerating your receivables too.