Tax News By Christopher: It’s OK to Say No: How and When to Fire Problem Clients (Nicely)

Sometimes someone special walks through your door – someone so special that they make you want to scream in frustration.

I’m talking about the problem client – also called the toxic client. We’re talking about that person who does nothing but cause you problems and agony. The ones who make you question why you went into business for yourself.

Well, these moments are precisely why you went into business for yourself. When you work for someone else at a company you don’t own, you might have to put up with an awful lot of ridiculous behavior and situations from coworkers and clients. You don’t get to decide who gets the boot.

But when you own your own tax business, you can decide when a client has crossed a line – and then take action to correct the situation. It’s both a drawback and a perk of being the big boss. (But ultimately, it’s more of a perk, because at least you get to be in charge of making the call!) That’s why it’s important to learn how and when to fire problem clients.

First, determine if they are actually a problem

Part of working for yourself – or really just part of life – is getting along with different kinds of people. Some of your clients will become your friends. Some of your clients will be just that – clients – and you’ll have purely business relationships with them. That leaves a handful of others who will always not be as easy to work with as others.

However, “not as easy to work with” doesn’t actually take them to the level of toxic clients who are so bad you need to fire them.

Ask yourself these questions:

What is the client actually doing wrong? Is it something you can coach them to be better at? Maybe you can help teach them the best ways to work with you (for example, teaching them the right timelines for getting documentation turned in).
Is your ego getting in the way? Do you feel that somehow they are questioning your work? Don’t let pride get in the way of a client relationship. Listen to what your client needs and see if they have a valid point – and if you can fix or improve upon whatever they’re asking for.
Is it still possible to resolve the issue? Are you both still communicating well enough that you can sit down and listen to each other? Is it possible to reach an understanding and move forward?

Depending on the answers to these questions, you might be able to work things out.

Have you tried absolutely everything you can to salvage the relationship? If the answer is “yes” and it still isn’t working, keep reading …

Problem client red flags to look for

Sometimes you aren’t going to be able to resolve things with some clients. Four of the biggest, most glaring red flags are:

Poor communication: Is your client really listening to you? Can you understand each other? Does your client let lots of time elapse between responses or give no response to your queries (time sensitive or not)? Do they refuse to use efficient ways to communicate (for example, they insist on talking on the phone or visiting in person when an email would do)?
Poor understanding of what the problem is: This point is related to poor communication, but it’s worth talking about separately. Do you understand what the problem is – and is your client able to articulate it to you in a constructive way? Can you understand well enough to fix the problem? If you can’t even work together well enough to understand the issue and you reach a communication impasse, that’s a bad sign.
Know-it-all attitude: Does your client tell you how to do your job, whether they know anything about taxes or not? You need their input about their financial situation, yes. However, once you get that info, you’re the expert and they are there to get advice from you. (After all, if they already knew the best way to file their taxes, they wouldn’t have come to you, right?)
Overly harsh criticism: Does the client give unnecessarily harsh – and often unhelpful – criticism? Is their attitude hostile or are they making accusations against you?

When you see too many of these red flags in your client relationship, it’s time to cut your toxic client loose. Otherwise, you risk digging yourself in deeper, losing more money, increasing your stress levels, and making the situation worse overall.

When it’s time to have the conversation

Once you’ve decided to let a client go, how do you tell them?

Be direct, but not cruel. It’s all right to say something, such as, “This doesn’t seem to be the best fit for you or for me.” It’s not all right to call someone out and say, “I hate working with you. You’re a …”

Give as much or as little detail as you feel comfortable with. I will say, in this area, less is always more. You don’t have to outline every disagreement you have had with each other. You don’t really owe them an explanation beyond, “This doesn’t seem to be working for us.” However, if you’d like to give any additional detail, feel free. Just don’t cross the line into giving away too much personal information.

Offer helpful recommendations for other tax advisors. Feel free to make suggestions of other offices or individuals they may want to contact.
Wish them all the best. Always try to leave things on a positive note as much as possible.

Of course, there is a “plan B.” You can always say something along the lines of, “Some things have come up and I’m not going to have the time and energy to devote properly to you right now.” Whether it’s true or not, some people would rather not give any hint of a problem within the client relationship. That choice is up to you. We tend to recommend the direct-but-polite route, but you make the decision that you’re comfortable with. After all, it’s your business.

Also, please note that if your client has actually done something really bad or even illegal, such as sexually harassed you or your staff, provided false documentation, or somehow put you and your staff in danger or in any legal risk, all bets are off. Call your lawyer and let them know exactly why you’re cutting off the relationship.

Assuming this is simply a toxic client you need to let go, a sample script or email (because we recommend talking on the phone or in person, but if you have to do an email, you can adapt this script) might look like this:

Hello, [Client]!

After much thought, I regret that My Tax Company, LLC, will no longer be able to help you with your tax preparation.

As much as I’d like to be able to help you, I think another tax preparer may be a better fit for what you need. You may want to reach out to [Competitor A] at [contact info] or perhaps [Competitor B] at [contact info] to see if they can help you.

Thank you again for your business. I wish you all the best!

Keep it short, simple, and to the point.

Final words

In short, know your deal breakers when dealing with clients. What can you put up with from difficult clients – and what behaviors and situations will not be tolerated?

When you’re doing a cost-benefit analysis to consider if this client is big enough to keep or not, remember to include your own sanity in that check. It’s not always about the dollars and cents. If a client causes you too much stress or could possibly damage the reputation of your office (either because your project goes badly or they start talking badly about you around town), they aren’t worth working with.

Do you have any horror stories about clients you had to let go or whom you wish you’d let go? Let us know in the comments.