Bookkeeping engagement letters are important documents that need to be updated as client work changes and your firm evolves. Basically, they serve as a contract between you and your clients, defining the terms and scope of your professional relationship. These engagement letters can also be a helpful tool for resolving disputes and preventing legal problems.
Updating your engagement letters at the beginning of the year can be a fantastic way to take stock of your bookkeeping firm. This is the time to check whether or not client relationships are worth continuing, whether you should change up your service packages, and how your engagement letter can better reflect the ACTUAL work you are performing.
Are your service packages profitable?
We’re always looking for ways to improve our practice AND that bottom line. A new year means a fresh start – and, potentially, a much needed makeover for your bookkeeping firm. When you start updating your engagement letters, you can take the opportunity to examine how much work you are doing and whether or not the payoff is worth it. Examining the specific types of work you are doing for each client can also help you redefine your service packages! At the end of the day, don’t be afraid to make changes necessary to help your firm succeed.
Actual vs. estimated work
It’s hard to anticipate exactly how much work a job will be sometimes. While can’t predict every obstacle that will arise during a work engagement, we CAN look back at the past year and use what we know to plan ahead. Start by realistically assessing what terms of the engagement letter went fulfilled and unfulfilled. For example, did your client fulfill all of their responsibilities outlined in the letter? Then, determine what you’ll add to the letter. What additional tasks fell on your shoulders? What time frames need to be adjusted? You’ll also want to look for vague wording in your engagement letters. Remember that you want to be as specific as possible in order to avoid any confusion or miscommunication.
Has work for the client changed?
Client relationships are constantly evolving. Now is a great time to check in with your clients and talk about what the future of that relationship looks like. Are they wanting you to take on more responsibilities? Did you find yourself doing additional work outside of the terms of your engagement this previous year? Businesses often shift directions, which is why it’s good to sit down with your client, discuss their goals for the future of their business. This can help you determine what services you should or should not be offering them.
Staying in scope with engagement letters
A primary function of engagement letters is that they define the scope of client work. Renewing an engagement letter annually encourages you to review the services your firm has provided over the past 12 months and evaluate if the scope has changed. After all, your time is valuable. Overextending yourself for one job will eat into your profits and add additional stress to your busy work-life.
Your bookkeeping engagement letters aren’t just there to settle disputes – they can be incredibly useful tools in the management of your bookkeeping firm. Regularly reviewing your engagement letters will enable you to see what sort of work you’re doing. You can now determine if you’re being paid enough based on all the services you’re actually providing to your clients.
Don’t wait around! Make your first New Year’s resolution reviewing your client engagement letters.