First Time Client That Left Wanting To Come Back

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#1
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Title says it all. I've been working for myself full time since August 2021. I have a fairly high client retention rate. I've fired just as many clients as don't come back, especially just for 1040 prep.

Anyways, I have my first clients that left to go to another CPA firm for their 2022 tax prep that already want to come back. I prepared 2020 and 2021, 1065 return and personal. The wife sends me an explanation that the CPA that they left be for isn't providing them as solid of services as I was.

Anyways, I believe they left because in 2021 they owed a good chunk of money because the husband's business grew a decent amount and they've never fixed their W-4s. I had reached out at least one time during 2021 to see if they wanted to do some tax planning and received no response.

How do you proceed with this type of client? Do you charge them more? Do you tell them too bad so sad?
 

#2
KoiCPA  
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It largely depends on how you feel about the client. If you think they can be a good client for you, then welcome them back into the fold and don't make a big deal about it. If you want to, you can outright tell you're not taking them back. Or if it's just a question of money, it's been a couple years of high inflation. Charge them whatever makes it worthwhile, perhaps including a few to re-enter data from the prior year returns so that your software has the right carryover information.
 

#3
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I tend to look less favorably on returning ex-clients than I do the average walk-in prospect. Fool one once kind of thing.

In these situations if I'm amenable to potentially taking them back, which if I'm being honest doesn't happen most of the time, I want to hop on a short call to understand why they left (full and honest disclosure), why they're coming back and why this time is different so to speak.

If I don't like everything they tell me on that call chances are high that I'm going to decline.
 

#4
Miami88  
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Reading between the lines it sounds like they left due to price and realized it wasn't a bargain. If this was me, and they were otherwise clients I'd want to work with, I would charge them my new, higher price (that I use for new clients) plus some type of PITA/returning client fee.
 

#5
JAD  
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Client: I want to come back.

Me: Definitely, let's talk about it. But I want to be upfront. Every year my billing rate increases. Every year the law becomes more complex. Every year the IRS creates new reporting requirements. I am more expensive, and preparation takes longer. As you evaluate your options, please keep in mind that my charge could easily be 25% more than what you last paid.
 

#6
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I would also hesitate to take back a client who left because they "thought" I did a poor job when it was actually them who cause the result due to being unresponsive.

It might sound like I'm being emotional about it but that's not it at all. It is actually because there will be a "next" occurrence, and one after that and one after that. It exposes you to stress and maybe to liability.

But if their issue and dealing with them is really not so bad, then as others have mentioned, just carefully disclaim your prices.
 

#7
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How did they leave?
Did they provide you the courtesy of notice, and if so, was the notice early enough for you to take on more work to counter the lost time/funds you would have otherwise devoted to them?
 

#8
Beagle  
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I've had clients leave and come back. How is that problematic? Welcome them back and move on with it. Don't take business personally.
 

#9
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It's more of a business decision - not so much emotion.

If you charge by the hour, I guess it's not much of an issue.

Also - these things are generalization and not always true, but...

Clients that pop in when they only have a problem or a complexity are low yield. You only get them on the years in which they have an issue, such as a sale of a rental, etc.

Clients with no pro-forma software update from the prior year are also lower yield as compared to return clients.

Clients for any years in which they decide to self prepare (or go to a "cheaper" preparer) are more likely to not correctly carry forward NOLs, PALs, capital loss carryovers, depreciation, and other items; create more work that is difficult (but not impossible) to charge enough for.

Clients that go somewhere else increase risk you starting the tax return but the clients not finishing it with you.

As ReckedCPAEA eluded to, 9 out of 10 clients (more like 49 out of 50) do not tell you if they are coming back or not, making it unclear whether extensions should be filed or even what the status might be if the tax return has been started.

When clients go to another preparer and questions come up, this can be a pain in the neck.

It behooves a practice monetarily in general to look for clients that are expected to provide a high retention rate. Clients that come and go are likely to have lower retention rates.

Clients that leave and come back are more likely to have behavioral tendencies that are hard to work with.

A client who has no plans to come back might be less likely to settle an invoice as compared to one who relies on your services every year.

I'm sure I missed a few things.
 


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