Eight Steps For Building Better Client Engagements

By Davis Bell, CEO, Canopy.

Structuring client engagements is one of the most critical aspects of running your practice. A thorough engagement letter acts as a roadmap – outlining services, enabling your firm to standardize its service pricing, and setting client expectations in addition to establishing the cash flow and revenue cycle for your firm.

If your experience to date tells you this is easier in theory than practice, this eight step plan for developing your firm’s pricing strategy and engagement structure is for you. Let’s get started by delving into some of the most critical considerations for creating client engagements and tips for how to use the process to establish clear client expectations:

1 – Establish Clear Expectations

The importance of setting clear expectations with clients cannot be overstated. Proactively managing customer expectations during the engagement scoping process allows for anticipating potential issues, thereby minimizing service gaps and fostering greater customer loyalty and trust.

An engagement letter provides a platform for transparent communication by delineating the scope of services, fees, timelines, and specific deliverables. By clearly outlining these parameters upfront, both you and your client are on the same page, minimizing misunderstandings and fostering a collaborative environment.

From the outset, clients know what to expect, enhancing their confidence in the accounting process and ensuring alignment with their goals.

2 – Build Trust and Transparency

Trust is the cornerstone of any successful business relationship and a robust engagement letter reinforces transparency by detailing the responsibilities of both parties, including confidentiality clauses, conflict of interest disclosures, terms of the agreement, billing and data security.

An engagement letter serves as a roadmap, clearly outlining the roles and responsibilities of parties involved in the professional engagement. This transparency instills confidence in clients while establishing expectations regarding confidentiality and the secure handling of data.

3 – Manage Risks and Legal Protection

In today’s litigious environment, mitigating risks and ensuring legal protection are paramount considerations for accounting professionals. An engagement letter serves as a legal contract that outlines the terms and conditions of the engagement. It includes liability limitations, indemnification clauses, and dispute resolution mechanisms.

By clearly delineating these provisions, accountants can safeguard their interests and protect themselves from potential liabilities, reducing legal exposure and mitigating risk.

Terms commonly include: scope limitations, service limitations, payment schedules, termination conditions, limits on liability, document retention process, privacy notices, and any applicable laws based on your state or country.

4 – Enhance the Client Experience

The client experience encompasses every interaction a client has with your accounting firm, from the initial consultation to the completion of services. The right engagement letter not only enhances the customer experience within your accounting business, but it also lays the foundation for a positive client relationship by clearly setting expectations and responsibilities.

Clear confidentiality clauses, conflict of interest disclosures, and data security measures are all components of an engagement letter which can help to build trust with clients, fostering a mutually beneficial relationship.

5 – Define Project Budgets, Timelines and Milestones

Another important way that engagement letters can improve communication internally and externally while increasing the chances of successful client relationships and workflows is by stating clearly defined objectives and project milestones.

An engagement letter should clearly define the details of any anticipated client work  including timelines, milestones, and deadlines to ensure that expectations are met and projects are completed on schedule.

Proactively managing timelines and communicating progress updates enhances client satisfaction and fosters trust in the accountant-client relationship.

6 – Proactively Address Conflict Resolution Procedures

It is essential for an engagement letter to incorporate guidance for resolving conflicts in a fair and equitable manner. It may include clauses for mediation or arbitration, offering structured processes for resolving disagreements.

By proactively addressing potential conflicts within the engagement letter, your firm will demonstrate its commitment to handling disputes professionally and minimizing disruptions to the client relationship. This approach ensures any issues that may arise are resolved swiftly and amicably, preserving the integrity of the client-accountant partnership.

7 – Reduce Financial Friction

With a clearly defined engagement letter that your client accepts ahead of working with your firm, there should not be any surprises when it comes to fees, billing cycles or payment terms. Ideally, this should be all that is needed for your firm to be paid equitably and in a timely manner, however, if there is a payment dispute, having a pre-existing, clear, and legally binding engagement letter makes it much easier to challenge any payment disputes that arise.

8 – Begin every engagement the right way

Creating a standardized engagement letter should be step one in every new client relationship or new work project. As noted above, there are many reasons why this is important for both internal order and peace of mind to create external client parameters and project schedules that keep everyone on the same page and in a mutually agreeable contract that makes doing business with your firm easier and much more effective. 

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Davis Bell is the CEO of, Canopy, a leading cloud-based practice management platform for tax professionals,

He has held leadership roles in strategy, operations, and finance at a succession of SaaS companies. He’s passionate about building innovative software that delights users.