Accounting Art: Substantially Boosting a Fixed Fee

Tuesday, August 25, 2015 Print Email

Most companies both small and big have in most cases been on fixed annual fees that are paid on monthly basis. Depending on the time charges, some have even allowed end of year adjustments. At the close of the year, fees across the board are normally increased by 5-10 % depending on the prevailing circumstances.

Once in a while, it is necessary to have the fees increased by 30 to 40 % due to a creepy stealth scope and when the consistent rise was not going to work out. The scope went up over several years for reasons not under the control of the client. This entails such items like changes in bank reporting or Generally Accepted Accounting Principles (GAAP) or requirements of consolidating entities, changes in reporting pension plans, tax returns that are more complicated, simple returns by children who get more involved when they acquire real jobs, clients who make investments in hedged funds with 30-pages-K-1s and reporting multistate. One time special work does not get to be included here since this would not be within the regular work realm and would not normally be billed together.

In the cases that were extreme, the fee had to be increased to what they required it to be. The work of auditors was in the determination if the fee should be increased, document these changes over these five years in order to track the increased work and have a meeting with every decision maker or owner face to face. If need be, auditors have to fly all the way to Florida to have a meeting with some of the owners. It has to be a serious issue since the firm desires to attain the increase requested and there were no plans of negotiating it. Similarly, they did not want to lose the client or upset them due to the increase. This has however not occurred regularly but the company is happy to report that every time, they obtained the increase.

P.S Being what human nature is, the new fee includes some of the services that were previously considered as extra.

Source: ReadyRatios

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