Declining a prospective client
How a firm declines a prospective client or a business's appointment, what to record, and how to close the lead and write to the prospect.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Most practices are better at saying yes than no. A prospect arrives with a reasonable fee and an urgent deadline, and the questions that should come first, about conflicts, competence and the people behind the business, get asked after the work has started. Declining a client is uncomfortable, but declining one six months in, with unpaid work and a half-finished file, is much worse.
A decision not to act deserves the same care as a decision to act: reasons established, a partner's judgement recorded, the prospect told clearly, and the firm's records left in a state that makes sense if the same name appears again. This article covers each of those steps.
Reasons firms decline
The common reasons fall into a few groups:
- Conflicts. The prospect is in a dispute with an existing client, competes directly with one in a way the firm cannot manage, or is on the other side of a transaction the firm is advising on.
- Competence and capacity. The work needs industry knowledge, a registration or staff time the firm does not have in the period required.
- Integrity. Something in the conversations or the due diligence gives reason to doubt the honesty of the owners or managers: reluctance to identify who owns the business, pressure to backdate documents, or a history of disputes with previous accountants.
- Independence. For an audit or review, a relationship or another service the firm provides creates a threat it cannot reduce to an acceptable level.
- Scope and fee. The prospect wants a level of service, or a deadline, the firm cannot deliver for a fee the prospect will pay.
For firms that perform audits or reviews, these are not matters of taste. ISQM 1 asks a firm to manage quality across its whole practice, including how it decides which clients and engagements to accept. The IAASB's page on ISQM 1 describes the standard, which requires audit and review firms to design, implement and operate a system of quality management tailored to the firm and its engagements. Your acceptance policy is part of that system, and a declined prospect is evidence that the policy works.
Recording the acceptance decision
Achekam records a client acceptance review under QUALITY & GOVERNANCE > Client Acceptance & Continuance. The review follows a conflict check against the firm's own clients and contacts, and only a signed-in partner can approve it. Customer due diligence in the review is a tick-box confirmation by the preparer; Achekam runs no automatic FICA, CIPC or sanctions check.
Run the review before deciding, not after; how it works is set out in client acceptance and the conflict check. The conflict check is often what surfaces the reason to decline. When the answer is no, keep the reasons in writing: what was found, who considered it and what the partner concluded. The Document Centre keeps a folder for each lead as well as each client, so a short decline memo and any due diligence documents can be filed in the prospect's lead folder. If the same business approaches another partner next year, the history is there.
Declining a business's appointment in Achekam
Some prospects arrive through Achekam itself. A business that keeps its books on Achekam can appoint its accounting firm by entering the firm's Achekam address or firm code, and the firm can accept or decline that invitation. Accepting links the business's books to one of the firm's client records; declining leaves them unlinked.
Do not accept the appointment and then work out whether to act. Accepting gives the firm's people access to the business's books before the acceptance decision has been made. Leave the invitation pending while the acceptance review runs, and decline it if the partner decides not to proceed.
Closing the lead as lost
If the prospect came in as a lead, close it as lost. A lead that someone has worked cannot be deleted in Achekam. The server lets an administrator delete a lead only while it is still New, has not become a client and has no proposal, and the CRM screens have no single-lead delete button. This is useful rather than inconvenient: the closed lead keeps the record of the approach, the conversations and the decision.
Take care with the status you choose. A lead marked 'Not interested' is added to the firm's mailing list automatically, and the firm's campaigns and newsletters then reach that address, each with an unsubscribe link. For an ordinary prospect who simply chose another firm, that may be fine. For a prospect the firm declined because of integrity concerns, the firm probably does not want to send marketing, so check the mailing list after closing the lead. Lost-lead handling is covered in more detail in closing lost leads.
What to tell the prospect
Tell the prospect promptly and in writing. A short letter or e-mail is enough:
- Thank them for considering the firm.
- Say that the firm is not able to act for them.
- Give a reason only where the firm can give it safely; a conflict cannot be explained without disclosing another client's affairs, and "we are not able to act on this occasion" is sufficient.
- Return any original documents they provided.
- Where a deadline is close, point out that it exists so they can make other arrangements.
From the lead's page, staff can have AI draft an e-mail from a preset, edit it and send it with any attachments, and the message is kept on the lead's record. Read and rewrite the draft; a decline letter is not the place for generic warmth that implies the door is open when it is not. A message shown as sent means only that the mail provider accepted it, so if the prospect later says they never heard back, check the delivery status rather than assuming.
Where the reason for declining involves a suspicion the firm may have a duty to report, take advice before saying anything to the prospect about why.
A worked example
A construction company asks the firm to compile its statements urgently for a tender. The conflict check shows the firm audits the company's main competitor for the same tenders. The manager records the conflict in the acceptance review, the partner decides the firm cannot act, and the manager files a short memo in the lead's folder. The business had sent an appointment through Achekam, which is declined. The lead is closed as lost with a status that keeps it off the mailing list, and the manager sends a two-line e-mail saying the firm is unable to act, with the deadline mentioned so the company can move quickly.
A question for your acceptance policy
Look at the last few prospects your firm turned away. Could someone outside the firm tell, from the records alone, why each was declined and who decided? If not, the decision was made but not documented, and that is the step to fix.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
