Accountants have enough to worry about during tax season without needing to chase clients for information. Looming deadlines are made ever more stressful and due diligence takes much longer than it should, all because you’ve landed a procrastinator as a client. Not to mention, if a late client becomes a regular, you can count on the fact that you’ll be chasing them for many years to come.
Although it’s not part of your job description to coach clients through their tardiness, filing taxes with missing information is simply not an option. Thankfully, there are a few methods you can adopt to mitigate the issues caused by slower clients and ensure you still complete your work to the highest standard. Follow these actionable tips to make sure this tax season is a productive one.
Why Do Clients Procrastinate?
Did you know that around 20% of adults in the US procrastinate chronically?
Usually, procrastination is linked to something much deeper, and so is avoiding an accountant. Tax season is a stressful time for accountants, but it’s not exactly easy for clients either. Acknowledging their tax obligations and providing the necessary information may be difficult for clients who are struggling financially. It’s easier for them to ignore your repeated reminders than it is to face the reality of tax season. As deadlines creep closer, the more this stress is compounded.
If you think a client might be struggling under the volume of requests, due to a recent life event, or because of changing financials, approach the situation with a gentle hand. Acknowledge their struggles and tailor your requests to their situation. For example, those clients who simply shut down when faced with a myriad of tasks might benefit from a clear action plan that outlines all necessary steps. Or, if a client has to focus on a wedding, funeral, or new baby around tax season, you should start the process of seeking the information as far in advance as possible.
How to Deal with Tardy Clients…
Now that you know why clients might be inclined to leave things to the last minute, you can approach them in the way that best suits them and your practice. These methods are common practice for many accountants across the country in the lead-up to tax season. However, employing these methods in the right way can see the best results. If a client is really pushing the deadlines, a few or all of the methods may need to be put in place to get the information you need.
- Establish Consistent Lines of Communication
Before the age of the internet, it was much harder for accountants to chase clients in search of missing information. Nowadays, however, it’s possible for accountants and clients to be in consistent contact all year round. By establishing a consistent line of communication, you can ensure your messages will be received, and that your client can reach out if they have any issues. Although email or phone calls are standard, there are other ways you can give clients an easier route to providing information.
In particular, cloud accounting software is a great choice to make sure clients and accountants can communicate effectively. As well as this, clients can upload important documents to this platform in an easy and timely manner, so you can check them over and make sure everything is up to standard. According to Fundera, 53% of accountants use cloud accounting to enhance their services and adequately delegate tasks, on top of improving communications. Even after tax season is over and done with, cloud accounting can serve your practice in other ways.
- Anticipate Delays and Perfect Reminders
If you have a regular client who always leaves it until the last minute around tax season, it’s a pretty safe bet they’ll procrastinate again this year. These clients may need an extra push, so it’s best to start the process of getting their necessary information a few months in advance. By anticipating these delays, you can mitigate their effect on your work, and ensure you’re not loaded with extra tasks as deadlines draw nearer.
Regular reminders are, of course, another method many accountants use to speed up the process of getting clients’ information. Using cloud accounting software, you can set up automated reminders and add these intervals into an action plan. However, not all clients will respond to these reminders positively. In fact, for some clients, more reminders will only push them to procrastinate further.
Generally, email or paper reminders should not be pushy or overbearing. Instead, remind clients why it’s vital you receive their information, why it won’t take nearly as much of their time as procrastinating will, and that they are a valued part of your practice’s day-to-day operations. If these reminders continue to fail, a phone call, video call, or in-person meeting might be the extra push clients need to hand their documents over, as well as allow you to understand their situation a little better.
- Set Clear Timelines
However, phone calls and other reminders are easily ignored. It’s important to add a time scale to your initial information requests and any reminders you send to clients. Upon first reaching out to clients, prepare a clear action plan with a forgiving, but concrete, timeline that details exactly what information you need and when. Also, lay out why you need that information and how clients can send it to you. When sending reminders, include this helpful information again, but work within the deadlines you’ve already set out rather than setting new ones.
Again, some clients deal better with deadlines than others. If a client is going through a stressful time in the run-up to tax season, throwing deadlines at them may just compound the problem. Instead, you can still send them a general timeline of what they need to provide and when, but with no set dates. Then, you can include the final, hard deadline as the one you both must meet. This takes the pressure off your clients slightly but also creates value in the work you’re doing which may be more likely to convince them to get their documents in. However, these action plans must be provided well in advance of the final deadline to see the best results.
- Involve a Third Party
For those clients who tend to ignore your reminders, it may be worth involving a third party from your practice. This may be a colleague with some time on their hands, or it might be a dedicated individual that your practice provides. Either way, informing your client that they’ll be monitored throughout the process may push them to upload documents in a more timely fashion. As well as this, a third party who monitors the process could also provide assistance in other ways, such as gleaning further information as to why delays are happening, establishing a personalized plan for your client, or simply setting up another point of communication should they require further help.
- Leverage Extensions
Of course, it is possible to apply for time extensions to file tax returns if it won’t be possible for your client to provide their documentation on time. However, with this in mind, clients may be even more likely to procrastinate providing you with the necessary information. During your communication with your client, do not mention tax extensions as a possible outcome, or even as a last resort.
Instead, if a client enquires about extensions you should outline your practice’s approach to them, and whether they are at all possible for the client in question. In many cases, accountants can only file for extensions on behalf of their client with written permission, and even in this case, you will still require some preliminary information to do this. Due to this process, it’s much easier, less stressful, and less time-consuming for clients if they simply provide the necessary information you need on time.
- Instate Consequences
As a last resort, your practice may have penalties in place for those who are late providing information. If your practice doesn’t apply these penalties or has a dedicated delay policy in place, it might be time to consider escalating the idea and setting one up. Most penalties will come in the form of added fees for those accountants who have to spend valuable time chasing information. Some practices charge up to 5% of the total tax that must be paid, while others fix their own “late” fees. Either way, clients must be made aware of these potential fees in the initial contract.
While it may not be beneficial to mention these penalties again during the action plan, informing your client that there might be far-reaching personal and professional consequences for delays is prudent. It’s also at your discretion whether you charge penalties for clients who have never been late before but are experiencing extenuating circumstances. The fees should act as an incentive for clients who tend to procrastinate, but should never further this procrastination.
Conclusion
A client with a tendency to be late can mess up your tax season schedule, leave you focused on unnecessary tasks and drag out the process for much longer than it should be. Thankfully, as an accountant, there are some simple and subtle ways to encourage the timely sharing of information. With any and all clients, reliable lines of communication are a must. Cloud accounting software can handle communication, document sharing and validation, and more all on one platform.
It may also help to understand more about your client and their lifestyle, and if anything might get in the way of them sending information to you. If you have a regular client who tends to leave things until the last minute, or a new client you suspect won’t be the most timely, anticipating this delay will save you time and effort this tax season. These clients should be given extra assistance by way of dedicated timelines/action plans, and regular check-ins with you or a third party to monitor progress.
In general, extensions should never be an option for clients who aren’t punctual; only for those who have genuine extenuating circumstances. In the most worrisome of cases, consequences such as late fees can be sought. These must be clearly laid out during the initial contract, and clients should be made aware of this possibility during regular correspondence.
Sources
- https://psycnet.apa.org/doiLanding?doi=10.1037%2F0033-2909.133.1.65
- https://www.xero.com/uk/guides/small-business-cloud-accounting/
- https://upjourney.com/how-to-politely-remind-someone-to-do-something
- https://www.journalofaccountancy.com/issues/2019/sep/dealing-with-last-minute-clients.html
- https://www.fundera.com/resources/accounting-statistics
- https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return
- https://quickbooks.intuit.com/r/payments/late-payment-fees/
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