Breaking the books: How a new practice launched annual retainers

When they left their corporate roles to launch their own accounting business, Paige Howard and Lauren Nikolovski – managing partners and the ‘P’ and ‘L’ in P&L Business Partners – didn’t want a client list filled with businesses they only met once a year.

Instead, they desired deep engagement with clients, and genuine finance partnerships that would enable the pair to share insightful advice and powerful direction.

A retainer model rather than hourly rates gives the client certainty about how much the financial management of their business will cost each month, and provides the practice consistent, predictable income.

“It’s important that we’re really transparent about how we’re going to charge for our services,” says Nikolovski.

If clients hired a salaried finance manager in-house, they would not only conduct transactions and tasks, they would be available all week to help answer financial questions and provide advice, says Howard. That’s the relationship she and Nikolovski want to build.

“We want to be their go-to person for anything to do with finance, and we don’t want them to feel as if they’re on the clock with every single phone call,” Howard says.

Deciding on retainer costs

Although there are several packages offered, most clients are likely to choose one of two – a standard or a premium package. Howard and Nikolovski tailor the costs slightly within each package, based on the size and complexity of the business, to ensure the likely workload is covered.

The standard package – they say they usually cost this at between $1,200 and $2,000 per quarter, based on a workload that may be slightly ‘lumpy’ over the course of a full year – includes:

• Ongoing management accounting, including bookkeeping
• BAS preparation and lodgement
• Quarterly reporting on business performance, including financial statements and analysis
• Quarterly meetings to discuss financial results and business performance

They offer this package to smaller businesses that would benefit from greater understanding of their finances.

“A lot of our clients have said they didn’t ever really know how they were performing. They would have that annual touchpoint with their tax accountant at the end of the financial year, and the conversation was about how much tax was payable or refundable,” Howard says.

“These clients get a catch-up with us on a quarterly basis, and we provide our commercial lens on performance, opportunities and risks.”

Howard and Nikolovski calculate a retainer for their premium package based on the client’s needs, and say there’s greater variation in that premium retainer. The work with these clients includes the standard deliverables, as well as more complex business performance analysis, budget and cashflow forecasting, strategic review, modelling, and ad hoc support.

Managing the risk of ‘scope creep’

If a client demands too much of the accountant’s time – and the accountant provides it – margin and profit can quickly deteriorate.

Nikolovski says that she and Howard manage this risk from the start of the relationship, beginning with a thorough analysis and understanding of the client’s business, goals and financial needs.

“We sit down with every client to understand what they require, and what sort of support they need from us,” Nikolovski says.

“For the majority of our clients, it will be an ongoing, working relationship. We discuss what their requirements are, what their budget is, how often they need reporting or reviews, and how often they want us to be present for them.”

Each agreement also has annual reviews built in to ensure that, should a client’s needs change, this is reflected in changes to fees.

“If there are any significant changes in terms of an increase or decrease in service, we can review at that [annual] stage,” Howard says.

To account for the unlikely event of a clients’ needs being estimated incorrectly or changing drastically within 12 months, the agreements also provide for cost revisions within 12 months.

“That’s unlikely, though,” Nikolovski says. “Small business owners are juggling so many balls, they’re not going to be calling us every day. We will be there for them when they need us, and doing what needs to be done in the background.”

Communicating value to potential clients

Howard and Nikolovski share their experience with their clients – each has held senior financial controller and finance manager roles across international markets, and is confident in her ability to help grow and protect businesses.

They also explain their processes and deliverables clearly, and draw two comparisons that clarify the value of their model:

• Between the advice they can provide and what a client might gain from an annual meeting or a tax engagement
• Between the cost of engaging their practice to become a part of a small business and the costs of hiring an in-house finance professional 

“It’s time-consuming and difficult to find someone with the right cultural fit and level of knowledge,” Howard says. “Then, there are further employer obligations beyond salary, including superannuation, insurance, training costs and leave entitlements.”

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