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The importance of setting up a client scope agreement for your firm and clients

Thomson Reuters Tax & Accounting  

· 6 minute read

Thomson Reuters Tax & Accounting  

· 6 minute read

Client scope challenges are not a trend, they have been here forever. It’s a known fact that not having clarity of scope can impact profits and workload.

The importance of setting a client scope agreement cannot be understated. For CPA firms, having clear expectations and boundaries with their clients can help avoid misunderstandings, scope creep, and other potential risks. Not only that, but investing in quality payroll solutions can save businesses time, money, and resources. In this article, we discuss the importance of setting a client scope agreement, what components make up a successful scope agreement, and why you should invest in one early on in a client relationship.

How do you know you are lacking in client scope?

CPA firms should pay close attention to any signs that suggest they may be lacking in client scope. One of the most obvious signs is when clients regularly ask for additional tasks that are outside of the original agreement. This could be a sign that the scope was not fully discussed at the start of the project or that there were misunderstandings about what was expected from both parties.

A common problem experienced by CPA firms who lack in client scope is scope creep. Scope creep occurs when clients change their expectations during a project, have difficulty understanding and following the scope of work, or if the scope is not defined properly. When this happens, it can cause issues such as cost overruns and project delays.

Another indication that your firm may be lacking in client scope is if you have difficulty accurately predicting how long projects will take or you are getting overloaded with work from your client, but aren’t being compensated for it. Without an effective scope agreement in place, it can be hard to gauge whether certain tasks fall within or outside of what has been agreed upon with your client.

Ultimately, having a clear and detailed client scope agreement in place can help ensure that all parties are on the same page, which will reduce potential risks associated with projects and improve overall efficiency.

How do you define a successful scope agreement?

Creating a scope agreement is an important step in any CPA firm’s relationship with its clients. It is essential for all parties to understand the expectations, obligations, and deliverables of any project. A detailed scope agreement can help prevent misunderstandings, avoid scope creep, and ensure that the project runs efficiently and on time. This includes details such as timeline, goals and costs, payment terms, and any other pertinent information. Additionally, it can help both parties to identify any potential risks or bottlenecks early on and make adjustments as needed.

Establishing a successful scope agreement for CPA firms requires the inclusion of key components that outline the expectations, objectives, and services to be provided. It is essential to clearly identify all parties involved in the project, as well as their individual roles and responsibilities.

Additionally, expected outcomes should be set within certain timeframes or budget constraints. Deadlines are also important for ensuring tasks are completed on time and that everyone remains accountable. Payment terms must also be included, detailing how payments will be made, when they are due, and any invoice handling requirements.

Lastly, termination clauses should be included to safeguard both parties from liability if things don’t work out as planned further down the line. With these components in place, a successful scope agreement can ensure all parties involved have a clear understanding of what’s expected of them throughout the project’s duration.

Define client scope at the beginning of the client relationship

If you think about it, when was the last time you paid for something that was good, you said, “Wow, that’s cheap? That rarely happens. No one likes dealing with clients who are feeling they were surprised with charges they did not know about. Defining scope ahead of the game can create a paradigm shift by getting that key information to the client up front.

It’s important to define those boundaries at the engagement point of the client onboarding process, as it produces bi-directional comfort. It’s not just for your firm’s comfort, it’s for the client as well. When the client knows exactly what is being provided to them as a service, they aren’t as likely to question the bill because they know what they agreed upon. If the client scope isn’t clearly defined, they are more likely to look at it very closely because they want to see what they are being charged for and they may have questions. If you can establish that client scope early on you are not going to waste your time and energy on work that you may not be able to recoup because there wasn’t a solid understanding on the front end of the client conversation.

As CPAs, your jobs and doing the work is hard enough. If you are questioned by the client because they’re wondering why you charge so much for this or that, it just makes your firm’s job that much harder. You can avoid confusion by just taking the time to ask yourself as a firm, “What are we trying to do here? What’s the body of work? What’s included, what’s not included?” And define that up front for people.

Benefits of establishing client scope agreements

Having an agreement in place is essential for protecting the interests of both the CPA firm and its clients, as it outlines expectations, timeframes, and payment terms.

To ensure that services provided are valuable, relevant, and timely, it’s important to review and update scope agreements regularly.


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