I have done some work for a new client and have suspected from the start that he may not be a good bet. His accounts were not the tidiest and his attitude was not good towards his record keeping. But it was a large piece of work and I saw it as good practice to sort it all out and it would bring in a good amount of money. I completed the work and sent him a bill. The terms period (which he'd agreed to in the letter of engagement) passed so I sent a statement and he sent an email saying he would pay asap. Another week later I have sent another email. I still have all his books for the last few years and will keep hold of them till I receive payment but I was wondering what everyone else does with clients like this one. How long do you give them and then what do you do? I know some clients don't always pay on time but this is quite a significant amount of money and not something I can just ignore.
If you stick with this client then a good idea to put them on a standing order, possibly with a balancing adjustment at year end when actual time spent is known.
As for the legal right of lien over the clients books, the bad news is that if they are limited you have no right to keep them even though you have not been paid, the good news is that not many directors know that!
The data however entered on YOUR (have to emphasise that word) system, is yours and the client has no right to it. Similar with the clients permanent file and any notes that you have on the client.
If they are self emplyed then you are not faced with such restrictions and they can basically go whistle for their books and records until you receive payment.
The key though is that the client should not be in a position to file their returns themself from information provided.
For now, until paid it might be best to try and think of this as a (rather expensive) training excercise as, as you say you have gained a lot of on the job knowledge from this gig.
One of the primary reasons for getting the previous bookkeeper / accountants input before taking on a client is to identify the one's out there that know exactly how to play the system.
kind regards,
Shaun.
p.s. next move may be a solicitors letter but be warned that small claims court can prove expensive and some of these people seem to collect CCJ's like stamps.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
We have had a few of these and often a debt collector who charges percentage of what he collects helps too. Not great if you hope to keep the client though. That said, who needs clients that don't pay .
All my new clients I sign up now I get them on monthly standing orders so they pay by the end of financial year.
So if sole trader comes to me looking to do their 2011/12 accounts and tax return for the end of this month then say I quote £600 then I do the work but it must be paid in full before I submit their SA return online. I would then get them signed up on monthly S/O going forward. So on the basis 2012/13 and 2013/14 are roughly the same then that will be £1200 to be paid in full by 31/03/14. Start standing order in Feb 13-Mar 14 over 14 months at say £85 per month. Then by March 14 they would have paid the bulk of two years fees £1190 (£85 x 14) then move them onto monthly S/O of £50 per month from Apr 14 onwards so by 31/03/15 they will have paid £600 towards their 2014/15 accounts and tax return.
Benefit of this is I receive the money up front ie they have paid for their accounts and tax return by the end of that period (I may not do the work for another 3-9 months). If they wish to leave then have some leverage with fees paid without work done. It smooths cash flow both for me, know what is coming in each month and the client in that they dont get hit with one large bill each year.
So far out of the new clients signed up over last 6 months or so no one has had any objections and have signed up everyone like above.
Thanks for your replies. I think a standing order is a good idea. This year his accounts were due as he'd left it to the last minute and there wasn't time to set all that up. I had thought that next year I would ask for the money up front but actually I'm not sure I want to work for people that have so little respect for me that they don't pay my bill! Having said that I'd like to pay my mortgage so we'll see...
Sharon, how long do you leave it until you involve a debt collector? Another local bookkeeper has given me details of one I could use if necessary.
Sorry to hear about your trouble. I'm a bit like Mark, all my clients are on standing order. Obviously a bit late this time, but if you do take on a big job try to get some sort of payment upfront, then if the job is big enough maybe another payment during the work. This means if they miss the final payment you have something.
We tend to say if not paid within six months of invoice we get stroppy, depending on the reply is when we get the debt collector in. Thankfully, we have only had to do this a handful of times.
We have also said "ok, appreciate you cannot pay in one go, what about a series of payments on account", at least that way you get something. This can be put on direct debit to catch up and add the forthcoming fees to it over a few months.
Going forward, I think many firm are going the way of Mark's we are doing the same with new clients and few complain liking the idea that they don't receive a large bill in one hit, it helps the clients' cash flow too.
I am a credit manager as well as a bookkeeper and can send a LBA (letter before action) for £15 for my clients. 95% of the time payment is forthcoming as soon as they receive that. Firstly it's on different headed paper than the clients and secondly if the client wins in small claims court they also have to pay costs and interest.
Client requirements differ on when they involve me but as a rule of thumb not before the invoice is 2 months overdue.
Great news on the payment..... Are you going to tell him where his wife and children are now?
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Great news on the payment..... Are you going to tell him where his wife and children are now?
Hilarious. You forgot to mention the dog
Bit of retained leverage for the next payment date
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
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