When to Part Ways

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As accountants and advisors, we often focus on winning and maintaining client relationships. However, knowing when and how to end an advisory engagement is equally important in our profession. Today, we'll explore this topic, inspired by some thought-provoking questions from reader Rachel Smith of Northwest Wine Accounting.

When Do You Know It's Time to Part Ways?

There's no one-size-fits-all answer, but here are some scenarios that might signal it's time to end an engagement:

1. Financial instability: If a client's cash flow is tanking, it might be time to step away. Remember, your reputation is on the line, and you can't help a business that won't help itself.

2. Ignoring Advice: When clients consistently ignore your recommendations, it's a sign that the relationship isn't productive.

3. You've outgrown each other: Sometimes, you've done your job so well that the client no longer needs your services. This is a win!

4. Stress outweighs benefits: If a client is causing undue stress, it might be time to prioritize your mental health over the revenue.

Reflecting on my past experiences with client disengagements, I've encountered a spectrum of outcomes—some that ended on a positive note, others that were more neutral, and a few that didn't go as planned.

The Good: Cutting Myself Out to Save the Client

I once had a client struggling to hit their sales targets consistently. They weren't taking all of my advice, and I could see the writing on the wall—cuts needed to be made to keep the business afloat. Rather than wait for them to realize it, I took a proactive approach. I came to the table with a recommendation that they cut me from the team. The bookkeeper could handle some of the work I was doing, and since they had initially engaged me to assist in raising funds (which was no longer a focus), it made sense to step aside. The client appreciated my honesty and the fact that I was putting their financial health above my retention, which allowed us to part on excellent terms.

The Okay: A Temporary Break That Became Permanent

Another client was in an industry going through a rough patch—poor performance was rampant across the board. On top of that, they weren't following my advice and were constantly trying to stretch the scope of my services without adjusting the terms. It became clear that something had to give. We mutually agreed to take a temporary break until the economy picked back up. However, the reality was that neither of us genuinely intended to reengage. The client likely felt the same way, but neither of us wanted to confront the hard truth. It wasn't the most satisfying resolution, but it avoided a potentially difficult conversation and allowed us to part on neutral terms.

The Poor: When the Client Pulls the Plug

Not every disengagement ends well; I've certainly had my share of those. A client decided to take on another business despite my strong recommendation against it. This new venture began consuming significant resources to the detriment of their existing operations. One day, out of the blue, they issued a stop payment on my recurring bill. When I reached out to ask about it, they brushed it off as an accident and promised to reissue the payment. After several follow-ups with no results, I realized the relationship had soured. I sent them a disengagement letter, which effectively ended our partnership. It was a tough pill to swallow, especially since it felt like I was fired, but it served as a learning experience for handling these situations better.

Evergreen vs. Project-Based Engagements: What Works Best?

I prefer evergreen arrangements. The goal is to build long-term relationships where clients don't have to decide to "re-buy" your services. My goal is to make my clients more profitable, which takes time. Therefore, I build my engagements to be an assessment upfront and then a monthly or quarterly ongoing engagement.

That said, there are cases where a project-based engagement makes sense, especially in interim roles. I've stepped in as a temporary CFO to help guide a company through a transition period. The goal in those cases is often to help them hire a full-time CFO once they're ready. I've even mentored a younger CFO, with the understanding that my role would diminish as they grew into theirs.

What About When You Can't Help Anymore?

Let's face it—sometimes you can't do more for a client. Maybe the company has outgrown your services, or perhaps they need a level of expertise that falls outside your wheelhouse.

Recognizing these moments and knowing when to bow out gracefully is essential. Staying on too long, especially when finances are tight, or the client isn't taking your advice, can lead to burnout. I've learned (sometimes the hard way) that sacrificing revenue for your sanity isn't just a cliché—it's a necessity.

Ending on Good Terms: The Importance of the Exit Strategy

Disengaging a client is easier said than done. I once worked at a firm where we sent out disengagement letters. It was emotionally challenging for the partners in a smaller market. While it created a small amount of temporary negativity in our community, the dust eventually settled, and it was a net benefit for the firm.

The key is to end things on good terms whenever possible. Whether it's an amicable departure because the client no longer needs you or a more challenging situation where you must cut ties, leaving the door open for future collaboration is always a good strategy unless the client drains you.

Final Thoughts on Disengagement in CAS

Rachel's questions highlight an essential aspect of advisory work: knowing when to step back. It's not just about protecting your sanity (though that's a big part); it's also about ensuring that you deliver value and not coasting because it's comfortable or financially rewarding.

As advisors, our ultimate goal should be to guide our clients to a point where they might not need us anymore. And when that time comes, we should be ready to step aside, knowing that we've done our job well.

What are your experiences with ending accounting, advisory, or tax engagements? I'd love to hear your thoughts and potentially share them on X (Twitter) for others to learn.

Thanks for reading, Luke Templin!

P.S. There are two ways I can help you grow your CAS offerings when you are ready:

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2. Join my How to Start Offering Advisory Services Cohort. The next one starts in January.

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