Telling the Client What Came Off
Reductions are invisible by default, which means a firm's largest expenditure on a relationship buys it nothing. Three ways to show them, and one not to.
- Entry
- 06 of 07
- Section
- What comes off
- Kind
- Practice
By default a client sees the figure after the reductions and never learns there were any. The firm's largest single act of generosity on the matter is invisible.
The review process in “Telling the Client What Came Off” depends on evidence that another authorised person can understand and question. For teams considering check the product information here in relation to time tracking software, time and project reports can add useful context, but they should remain open to correction and should not replace client acceptance or professional judgement.
Showing it is cheap. Showing it badly looks like a sales technique, which is why most firms do neither.
Additional context for “Telling the Client What Came Off” is available from Canada Revenue Agency payroll guidance. Confirm current legal, tax and accounting requirements with a qualified adviser where necessary.
What invisibility costs
The client believes the net figure is the value of the work. The next estimate is judged against that figure, and the reduction becomes the new baseline.
- A line on the bill: gross, deduction, net.
- A sentence in the covering note: specific, modest, once.
- The annual conversation: billed against recorded, with figures.
A reduction repeated three times is a price change nobody agreed to.
The first way: a line on the bill
Gross, the deduction, net. Three figures at the foot.
It is the clearest version and the one most firms are uneasy about, because it exposes how much the headline rates are discounted.
The second way: a sentence in the covering letter
"We have not charged for the time spent on the first version of the schedule, which came to about six hours."
Specific, modest, and it does not require restructuring the bill.
The third way: the conversation
At a review, annually: here is what we billed, here is what we recorded, here is the difference and why.
The most effective and the rarest, because it requires the figures to exist in a form somebody can discuss.
The way that backfires
A prominent "courtesy discount" line with a large number next to it, on every bill, every month.
Repeated, it reads as inflated gross figures with a theatrical reduction, and sophisticated clients treat it as exactly that.
Which reductions to show
Overrun absorbed, rework not charged, relationship investment. All three are things the firm chose to give.
Not: hours that should never have been charged, duplication, time on the wrong matter. Showing those introduces a problem the client did not have.
The distinction in one line
Show what you decided to give. Do not show what you should not have asked for.
What it does to a challenge
A client who has been told, during the year, about reductions made for them is a different counterpart in a dispute.
It does not win arguments about necessity, and it changes the tone of every one of them.
What it does internally
Forces the reductions to be categorised, because the ones you can show have to be distinguished from the ones you cannot.
The benefit of that categorisation is largely internal, as the previous notes set out.
The annual figure
Some firms give a client a yearly summary: billed, recorded, the difference. For large relationships it is a substantial number.
It is also the moment to raise a rate that has been discounted silently for three years, with evidence rather than assertion.
Timing
A reduction mentioned when it happens is information. The same reduction mentioned when the firm wants something is a negotiating move, and reads as one.
Writing the sentence
Plain, brief, no adjectives. "We have not charged the six hours on the first version." Not "we are pleased to extend a courtesy of".
The first is believed; the second is discounted on arrival.
The client who notices anyway
Sophisticated buyers compare the hours shown with the amounts and work out that a reduction has been applied.
Being noticed is better than being invisible and worse than being stated. A client who deduces a discount wonders what else is not being said.
Showing it on every bill
Where reductions are routine, a standing gross-and-net presentation is simpler than deciding each month whether to mention it.
The risk is habituation: a line that appears every month stops being read, and the gross figure starts to look like the real price.
The annual statement
For substantial relationships: billed, recorded, difference, by quarter. One page.
It is the single most effective document a firm can bring to a rate conversation, and it costs an hour to produce if the coding exists.
What it is not for
Extracting gratitude, or as a preface to asking for something. Clients detect the sequence immediately.
Sent in a quiet month with no request attached, the same document reads as transparency.
The firm that shows nothing
Most of them, and the reasons are usually that the figures are not available in a usable form and that nobody owns the decision.
Both are fixed by the coding described in this section. The disclosure question only becomes answerable once the categories exist.
The position worth holding
Tell them what you chose to give, when you give it, in one sentence, and keep the ledger internally so the annual conversation has numbers in it.