scope creep accounting

5 min

An Accountant's Secret Weapon: How To Tackle Scope Creep

Scope creep. Even the words send shivers up the spines of accounting professionals. It's a major cause for stress among accountants and having a scope creep project can diminish the reputation of an otherwise brilliant accounting firm. What are scope creep causes and how do you avoid it? Here's how to prepare your firm for (and beat) scope creep.

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What is scope and scope creep with example?

Ever receive a call from an existing client asking to add new services ­— or a potential client looking for more services than you initially pitched ­— after you've already begun billing for the engagement? That's scope creep.

In project management, scope creep (aka 'mission creep') refers to the gradual expansion of a project beyond the original plan without any formal discussion or agreement on the part of those involved. It occurs when when the requirements of a project or task change after it's underway.

When a project has been agreed upon, the scope is the set of deliverables and responsibilities that have been defined and agreed upon by all parties. Shortly, it refers to the work that needs to be done to complete a project. Once the scope is defined, it is set down on paper in a document called the scope statement.

What are most common causes of scope creep in the accounting industry?

In many accounting and bookkeeping firms, a culture of ‘yes man’ is often at the core. It can be hard to say no to clients when trying to win their business or when working with new clients:

  • Very poor scoping of the original engagement

  • Trying to cultivate a better relationship with the client

  • Trying to avoid confrontation with the client

  • Starting client work without a a signed document

  • Poor communication among team members

  • No documentation outlining the scope of the work was provided

  • Incorrect or missing information in proposals sent manually

How accountants and bookkeepers manage scope creep

Over eight in ten (85%) accountants and bookkeepers in the UK report that they’ve experienced increases in the scope of their client work in their business. In fact, a third of accountants and bookkeepers have gone so far as to write off all or part of an invoice to avoid having an awkward conversation with a client in the last 12 months.

Accountants and bookkeepers within firms earning a higher annual company revenue (£1 million to £2.9 million) are more likely to absorb the increased time and costs themselves compared to those within a business earning lower annual company revenue (up to £249,999), reporting 44% and 26% respectively.

The Hidden Cost Of Scope Creep For Accounting Firms

Accounting firms are extremely busy places. There are always more clients than there are accountants to help them. And clients often want to add new services or do more than they’ve agreed upon. That’s where scope creep comes in.

It can happen when an accountant agrees to do something extra without charging for it — like working late or taking on an additional task — or when an accountant charges for work that wasn't originally outlined in their contract. According to CPA Firm Strategy Expert Trow Trowbridge, scope creep is "one of the biggest invisible problems in the accounting industry and the largest invisible expense on a firm’s P&L".

This situation was highlighted by Ignition's report 2022 State of client engagement. The report gathers insights from 470 accountants and bookkeepers in the UK and explores the sometimes difficult relationships between accountants, bookkeepers and their clients. For instance, it reveals that:

  • 58% of professionals found it awkward telling clients that work they had requested was out of any agreed scope of engagement.

  • Scope creep costs accounting firms an average of £5,830 each month. That’s £69,957 in unrecovered costs every year.

  • 32% clients are not billed for out-of-scope work

  • More than a third also admit they manage increases in scope by just absorbing the increased time and costs themselves.

Not to mention the costs of scope creep on the teams mental health. 49% of respondent worry that their staff are overworked due to the regular increases in the scope of work they haven’t agreed or quoted for with clients.

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How To Avoid Scope Creep?

As an accountant, you are constantly under pressure to deliver. But the challenge is that you are also the one who has to track and control the project. You have to be on top of everything, including the scope of work and costs.

Many accountants worry about their clients’ negative reactions. But with 24% of clients refusing to pay for out-of-scope work, it is high time to put an end to this practice. According to the Project Management Institute (PMI), scope creep can be avoided with the following tips:

  • Define boundaries early

  • Don't agree to every request

  • Document every request made, and document your response

  • Offer a rationale for saying no

  • Lay out the consequences of breaking the rules

  • Explain how the new project fits into the larger picture

  • Always be direct and polite

automated invoicing and payments: accountants secret weapon against scope creep

Late payments is the most common awkward client situation. This is where the accountants' secret weapon comes in: an automated invoicing and payment system. Automated invoicing and payments systems allow accountants to delegate a number of tasks and improve communication with their clients by sharing documents. With such a tool at their disposal, accountants will be able to:

  • Allow their customers to centralise all their invoices and collaborate together from your shared space

  • Schedule their customers' payments and give them control through an automated approval system

  • Analyse their clients' financial performance at a glance

  • Set up automation rules according to the amounts to be paid, the suppliers or the level of approval required

This type of automation helps accountants avoid being blindsided by sudden changes in business models or sudden requests from clients who want changes made without paying extra fees. That means they can focus on doing what they do best — accounting — instead of spending time chasing down payments from clients.

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