The Truth About Terminating a Client - 9 Signs that It’s Time

1. Too many non-billable hours spent on client

Time is the key resource when it comes to working with clients. Therefore, if you spend too much time on a client, and you’re not being adequately compensated, the client could be a candidate for termination.

Using a simple time tracking tool is enough to be able to track how many hours you are spending on each client. The reports you get from the tool will show you which clients are profitable and which ones aren’t’

The first step you can take once you’ve identified a time-consuming client is to inform them that there has been an increase in the volume of work and propose a fee adjustment.

If the client doesn’t accept more hours being billed or an increased fee, it’s a good sign that the cooperation should be terminated.

2. Too many unpaid meetings and calls

A client can be demanding when it comes to meetings, calls, and similar. Although you can track these activities through overall time consumption (mentioned in the point above), frequent meetings and calls can be energy-consuming. In that case, the focus on other important things can dwindle.

For example, the client calls you twice a day and you have one meeting a week. The total time is adequately billed. However, the call and meeting scheduling is exhausting and can lead to a drop in overall productivity.

Our suggestion would be to reduce the meetings and calls, and set them at the times they’d disturb you the least.

In the cases where this type of cooperation disturbs your workflow and you have the impression that you don’t have enough focus for other things, you should consider terminating the client.

3. Unethical and unprofessional behavior toward your team

Oftentimes a client can be very profitable but doesn’t have a good business ethic. Communication with your team members or you isn’t at a highly professional level. in certain situations, this kind of communication can cause discomfort and dissatisfaction among the employees. This is a clear indicator for client termination if there is no change in the treatment of your staff and the way of communication.

4. There are money laundering indicators with the client

If your company has to apply the Law on the Prevention of Money Laundering and Terrorism Financing, you definitely know these indicators.

If there is a suspicion the client is laundering money, you should investigate them in more detail and consider the termination of cooperation depending on the findings of your analysis. These are the key indicators to prevent money laundering:

A client has no employees, which is not consistent with the type and volume of its business.
A client gives information that seems suspicious or vague.
A client desires to assure the accountant that there is no need to fill in or provide some of the documents required.
A client works with tax heavens.
A client does not know where business documentation is kept.
A client invoices services for which it cannot be ascertained if they have actually been provided,
Unusual profitability of the client in comparison to other legal entities in the same industry.
The client fails to provide an accounting document.
The accounting document provided does not contain all the data required for entering in the business books, and the client still insists that such a document be entered.
Large and sudden fluctuations in assets can be noticed in a client.
The client constantly operates with loss even though its existence is not endangered, while there are no justified reasons for this.
Unusually high costs for services provided by foreign suppliers are noticed in a client.
There are not evidence of any transactions, or such evidence is not satisfactory.
The client has recorded some individual transactions that are unusually high compared to other transactions.
The client pays for undefined services.
A client is involved in activities that are not typical of their business operations.

5. The client doesn’t accept a rational fee increase

You have deduced that the client isn’t profitable. You do many activities out of the scope of engagement you’ve agreed upon, which implies that you should adjust the fees.

In this situation, you should understand the tactics of how to increase the fee to the client.

If these tactics don’t work, the client is a candidate for termination.

6. The client is late with the payments

If the client is late with the payment deadlines, you are facing two risks:

The credit risk – the client will owe you a large amount of money at a point, i.e., they won’t pay for your work
Cash flow risk – if the client’s delayed payments result in a significant disruption of your cash flow, it will make your business operations more difficult.

Organize a meeting or a call with the client, where you will present your payment terms again.

Insist on the agreement of the date of the payments as well.

If you see the client cannot pay for services, it is a sign that you should settle the current debt in due time and consider terminating the cooperation.

7. You find out the client is facing financial difficulties

There are online databases that don’t cost a lot and can provide information about company accounts being blocked, as well as about its financial reports

Make sure that you operate with a client who isn’t facing financial difficulties.

However, if you find out the client is having difficulties, settle your debt in time and define a strategy for further growth.

The introduction of advance payments could be a good solution.