I’ve noticed that the phrase “it’s just compliance” is everywhere. Accountants reduce tax returns to “just compliance.” Lawyers write the fine print “just to be compliant” with state and federal regulations. Consultants in many fields think compliance is a necessary but bothersome step on the way to “real” consulting.
Compliance is evergreen. It never ends and the penalties for non-compliance can be severe.
What’s crazy to me is that it’s firm owners themselves who have reduced this large part of their knowledge and expertise to a low value (e.g. low fee) annoyance that stands in the way of the really important strategic collaboration (advisory) they want to do.
Here’s how a CPA put it to fellow CPAs: “You have clients right now who should be on $2,000 to $3,000 a month advisory engagements and are paying you compliance rates because that conversation just hasn’t happened yet.”
Let’s follow this train of thought for a minute using everyone’s favorite punching bag, tax returns.
The accountant positions tax prep as “just compliance.” The client hears the pejorative just and thinks “well it’s no big deal; it shouldn’t cost too much.” This in turn leads the client to compare the prices of tax prep services. Because they have been positioned as “just” it makes sense for the client to think tax prep is a commodity and the lowest priced service will be just as good as any other.
This is industry wide. I read an invitation from Accounting Today, a leading voice in the accounting industry that does just this:
“Client Accounting (or Advisory) Services (CAS) continues to be one of the fastest-growing areas in public accounting. Firms offering CAS are seeing significant revenue growth and expect this momentum to continue as clients increasingly seek ongoing strategic partnership rather than just compliance support.”
Compliance is required in all industries.
And it’s never “just compliance.”
A consultant who helps non-profits apply for grants told me that a client was shocked that the grantor was demanding repayment because the grantee was non-compliant. “We didn’t realize they could do this!”
One consulting firm helps companies that sell restricted goods and services overseas to be compliant with many, many federal regulations. When we first met, the CEO described their work as “just compliance” and that there was a lot of downward pressure on fees. I asked what happens if a seller is non-compliant? “They can’t get paid.” I recommended that they change their leading marketing message to “We ensure that you get paid.” There was much more interest and higher fees.
I could list examples from fractional executives like CFOs, CHROs, and CMOs. Compliance is required everywhere.
Emphasize the repercussions of being non-compliant
What your firm must do is the exact opposite of describing that work as “just compliance.”
If you don’t pay your taxes timely and accurately, the downsides can be pretty severe: high monetary penalties and even jail! Isn’t that worth getting the best tax preparer, not the cheapest?
If you don’t comply with the terms of your grant, or a loan or other contract, the penalties mount up . They will always cost more than the cost of hiring the best practioner. Always.
Ignore the compliance requirements of estate laws in your state and you put your entire fortune and your loved ones at risk of losing everything.
Clients are not at fault
It is your fault, and the fault of all the companies in your industry who prey on practioners. They position compliance as “just compliance” so you want to spend money learning what is better and more lucrative than that.
Don’t fall for it!
Better yet, get angry. Compliance is your high ticket bread and butter and should make you plenty of money if you talk about it properly.
“Want to avoid high penalties and even jail time? We’re the accounting firm that ensures you will never have to worry again about that.”
Instead of denigrating compliance, especially in comparison to advisory, put compliance at the center of your offers and provide options for advisory input along with it.
Compliance is the perfect fit for IMPACT Based Pricing (IBP)
IBP has 4 parts and compliance fits into all of them.
The IMACTs your firm creates: Write down three bad things that could happen if a client is non-compliant. What are the opposites? Those are the IMPACTs you create.
Your Great Fit Client profile: Who has the most to lose from non-compliance? Those people will be your Great Fit Clients.
The Discovery call: Ask questions about things the prospect holds dear and what they are afraid of, relevant to your area of expertise. Write them down and use those quotes in your offer letter.
The Offer Letter: This is the way you convey the 3 customized options you’ve designed for the prospect. Each option should offer some significant IMPACTs, including the penalties and costs they will avoid if they are non-compliant. You don’t have to overdo it, just make clear in one sentence that there are penalties for non-compliance and your options will avoid that. The more severe the potential penalty, the higher the fee.
Opportunity for you
I am working right now with small accounting firms and law firms to help them reverse the “just compliance” mindset and turn compliance into high recurring fees.
If you think “Yes, this has been bothering me, and I didn’t know what to do about it” schedule a meeting with me here.
Join the pro-compliance movement! Adopt IMPACT Based Pricing.
