When it comes to small business accounting, something to consider besides your books is your clients. It is not only your tax service, your vendors, or your marketing agency that needs periodic evaluation. Just as often, it is your clients.

Yes, the customer is always right, but what if they’re not?

Signs that your client is not right for your business include not only the obvious: they don’t pay their bills, but also troublesome indicators that the effort, time, and outlay of service you provide to a client are more of a drain than a benefit to your company.

If you are feeling less and less satisfied and comfortable with a client, consider a sit-down meeting before taking any action. If the problem is a result of a misunderstanding, a grievance, or other factors which can be resolved, this is the ideal way to not only evaluate the situation but work towards a remedy. If you and your client can come to a beneficial understanding, then that client can be retained, and you won’t have to let them go.

Also, consider what you’re willing to put up with. Some people are just difficult. Is their harsh personality something that can be tolerated? When it comes to some types of business, like accounting services, medical practice, or even legal services, clients often retain services under duress or during times of stress. The individual could just be in a difficult situation and act accordingly.

However, if there is a pattern of bad behavior and troublesome demands, and a sit-down meeting has not been successful in clearing up areas of conflict, it’s time to consider breaking up.

First, get a financial appraisal.

Your CPA or accounting service can let you know what it will cost to let a client go. There might be some monies owed, and the break-up could result in a loss of revenue. It is best to be aware of this prior to firing a client.

Next, here are the practical elements of a business relationship to consider when determining if breaking up a relationship with a client is in your best interest:

• Is the client not paying us? Working out a payment arrangement is fine, and it is a business necessity. But if your client has a pattern of late payments, or not paying her bills as agreed to, it’s probably time to break up with her. Late or unpaid revenue costs your business money. Your CPA can evaluate just how much lack of payment is costing you in terms of your own financial obligations.
• Does the client expect more services than agreed to? If your client keeps upping their expectations, without increasing their budget for your services, you will be extending more work hours, resources, and time without appropriate compensation. This is especially relevant for small businesses. Work with your CPA if necessary, and determine price ranges for degrees of service or product. If a client wants more than what they are paying for, you will be serving them at a financial loss. Make sure your clients understand the range and limits of what you provide for your service fees. If they constantly ask for more, without wanting to pay for it, it’s time to let them go.
• Is the client making us look bad? If your client fights your advice, won’t use your products properly, or is abusive, it really is not worth keeping them.

For any business relationship to thrive, both parties need to cooperate, respect each other, and understand both the expectation and the terms of a partnership. As your Fort Collins CPA, we see good businesses undone by bad relationships with clients. Try and amend a bad relationship with a client first, and if that is not productive, break up. It’s best for your business, and best for you to end a bad business relationship.