client can't/won't pay

client can't/won't pay

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After slogging my guts out to complete clients limited company accounts and PT return, both due at end of month, client has given sob story why he can't pay prior to submission of both.

I did ask for payment on account prior to work but he kept saying I will pay next week.

Now he says he has no money.

He wont sign dd to settle fees.

He won't pay even half before submission.

I even paid the AR filing fee and got him off 1000s of pounds of penalties (which I have charged for! ).

If I don't hold out for payment prior to submission it seems I wont have any leverage.

I should just sit it out and wait for payment?

Replies (65)

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By Arabita
25th Jan 2015 11:03

He sounds like a catch!

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By mrme89
25th Jan 2015 11:26

Don't submit anything until payment has been received. As you say, this is the only leverage you have. If you submit, you'll never see them again.

In future, don't start work until you have taken a deposit.

He says he has no money - does this ring true with the company accounts and tax return you have prepared?

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Out of my mind
By runningmate
25th Jan 2015 11:19

Que?

"I even paid the AR filing fee and got him off 1000s of pounds of penalties (which I have charged for! )."

I don't understand!  What penalties?

RM

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By andy.partridge
25th Jan 2015 11:24

Look . . .

If your agreement says you won't file without payment, then don't file.

When clients say they have no money they really mean they have none left over to pay you after treating themselves and other creditors as a higher priority. It's time to make yourself a higher priority. It's the only language some people understand.

 

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Replying to buxtonr:
Red Leader
By Red Leader
26th Jan 2015 10:12

spot on

andy.partridge wrote:

When clients say they have no money they really mean they have none left over to pay you after treating themselves and other creditors as a higher priority. It's time to make yourself a higher priority. It's the only language some people understand.

Exactly.

Anyway, they can borrow from friends and family to pay you. If they have to, they'll find a way to get the money.

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By Arabita
25th Jan 2015 11:37

Penalties were Self assessment.

He has come back from a "working" holiday. So if he can afford that he can pay me.

Some profit in company.

EL says payment before submission.

Just dont want to sound like a broken record, aaking for payment. It gets awkward. He is one of those who thinks if he says "please" things can be done without payment.

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By ShirleyM
25th Jan 2015 12:29

Tell him you'll take something in exchange

50% of the company? Tell him you'll transfer it back when you get paid, with interest!

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Replying to David Heaton:
By mrme89
25th Jan 2015 12:31

No prisoners!

ShirleyM wrote:

50% of the company? Tell him you'll transfer it back when you get paid, with interest!

 

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By BroadheadAccountants
25th Jan 2015 12:51

Long-term

I'm wondering if you want to even keep this client in the long-term?

 

This must make you feel un-appreciated to deliver the work and have the ongoing fee chase.  The timing in January isn't ideal either is it?

 

I would try to be diplomatic (as you have been with the 50% offer).

 

For example:

We've enjoyed assisting you in delivering a good result with the personal tax return and company financial statements.  I operate a small business too and cash-flow is imperitive.  Could you therefore do whatever is possible to settle this fee soon.

 

Is it just me or do those who pay late expect the most of us?  A pity things weren't more balanced!

 

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Stewie
By Stewie Griffin
25th Jan 2015 12:52

Learned from bitter experience

Over the years, there have been a few clients who reckoned they couldn't afford to pay.

I remember one in particular who didn't pay for nearly 3 years.  She constantly pleaded poverty and I felt a little sorry for her...that was until one of my team checked her Facebook profile and there she was in various foreign locations sipping cocktails.  When she was in the UK she had lovingly posted various picture of her new BMW.

I was such a fool!!

Presumably you agreed the fee up front?  If so, my guess is that this guy is one of the similar mickey takers.  Get paid before you file!!

(By the way, we got paid in full very soon after discovering this stuff)

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By User deleted
25th Jan 2015 13:36

No pay, no file

Tell him in words of one syllable that you'll not file a thing until he has paid IN FULL and the funds have cleared. And stick to it. He's taking the [***] and has no intention of making your payment his priority. 

And make sure he knows exactly what penalties he'll be paying if he doesn't pay you quickly. Focus his mind.

Don't give him any leeway at all or he'll take it and want more.

And once he's paid and you've filed, kick him into touch pronto. 

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By cparker87
25th Jan 2015 14:11

Just refuse to file it

You've done your bit. Now its his turn to do his bit. When you've both done your bits, HMRC get their bit. Until then, they get nowt. Unfortunately it's the Client that suffers. 

I'll be having a similar discussion with a chap on Monday who owes me >1 year of fees and expects us to prepare and file 2013-14 Return by the end of the month too.. Oh, and he popped in with a VAT Investigation letter too. 

Quite glad of the business we're in really. Inevitably, no matter how naughty the client is, they always come back, because they'll always need you.

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By mgandc
25th Jan 2015 18:01

DD

It seems to me that if he won't sign a DD agreement, he clearly doesn't have any intention of paying.

Not having the cash to pay prior to submission is frustrating but happens from time to time, whether you'd accept to submit after is only something you can answer based on your dealings with him.

However, the fact he won't even commit to a DD agreement suggests you're fees aren't high on his agenda, if they indeed on the agenda at all.

 

 

 

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By qad999
25th Jan 2015 19:16

payment in full

is the only option .. dont be swayed , gut feeling is he will pay if you hold firm  and if he then buggers off, best rid of him

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Time for change
By Time for change
26th Jan 2015 10:59

The

Tell him in words of one syllable that you'll not file a thing until he has paid IN FULL and the funds have cleared.

second word, from memory, is OFF!

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By Outofpractice
26th Jan 2015 11:03

agree with other posts
Make it extremely clear that nothing will be filed until payment received in full and that your are under no obligation to file anything until paid for the work you have done & that he has NO ONE to blame but himself if he incurs fines and penalties.

I'd also cut him loose after payment received & stuff filed with simple reason being that due to his recent attitude you feel he doesnt respect you or the work you do & no longer willing to act for him, send him everything he'll need for accountant so if you get info request you can say already been provided to ex client on whatever date & if you need to provide again then this would be chargeable

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By The Minion
27th Jan 2015 10:59

they are not clients if they don't pap

If the EL says no payment no file then just send the letter special delivery enclosing a copy of the signed EL, sacking them and telling them you have passed the matter to solicitor. As far as I recall no payment also means that they dont have any rights to have your work, so they will just have to pay someone else for it, or pay your ransom (their words not mine)...

 

Of course if you accept credit cards point that out.

 

My experience here is that you submit, the pressure has gone and they don't pay.

When you finally put it into court then they use the failure to submit as a reason to pay and also complain to professional body.

Ditch them properly and professionally and move on, life is too short.

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Replying to Self-Employed and Happy:
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By User deleted
27th Jan 2015 11:08

Cash!

The Minion wrote:

Of course if you accept credit cards point that out.

Whilst this may allow you to collect payment, any savvy "non-payer" will more than likely be aware that they can issue a s75 claim under the Consumer Credit Act to reclaim the funds (over and above £100).

 

The bank would always have to 'investigate' and there is a strong likelihood that you would win, but the legislation is weighted on the side of the consumer for obvious reasons - If I were you I'd say cash or nothing!

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By petersaxton
27th Jan 2015 11:31

Don't submit until payment received

It's as simple as that.

I don't have that as a rule for most of my clients but I am planning on bringing it in for clients who have not paid promptly this year.

If you haven't started off with a certain rule I think you do have to be flexible and use your experience and knowledge of clients. 

This client is obviously not to be trusted.

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@enanen
By enanen
27th Jan 2015 12:29

Payment

I agree. No submission without payment n full. Amen.

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By The Minion
27th Jan 2015 12:34

as long as your EL says so...

then yes don't submit

If not the client can report you to professional body and also try to claim any penalties back off you.

 

I realise that there will be those who say "oh no he can't" but at the risk of dragging this into pantomime land, oh yes he can, and we have had ex clients try it!

get rid and move on, but do it right.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
27th Jan 2015 13:15

I agree with everyone else. No payment, no submission. 

You're running a business, not a charity.

50% up front, 50% on completion and paid before submission. Good clients won't bat an eyelid and it sorts them from the timewasters and chancers.

You don't need clients like him.

 

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By Arabita
28th Jan 2015 17:54

Thanks all for your comments. Much appreciated in times of overdrawn bank account.

 

So client has just let me know that company had another bank account, which was opened in last month of company's relevant accounting period end....  No statements available but he will provide me as soon as possible.

At the end he has signed off email saying thanks for understanding.....

What do I say? thanks for letting me know 3 days before filing accounts?

Yes I will drop everything and do it without even a hint of payment?

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Basset Hound
By Cuchulainn
28th Jan 2015 18:06

Wording

This thread has made me realise I don't have a "no pay no file" clause in my own terms.
Is anybody able to assist with a suitable paragraph?

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By andy.partridge
28th Jan 2015 18:07

I think you tell him . . .

  . . that you understand a little more than he realises.

Don't behave like a doormat, people will just wipe their feet on you.

Regardless of the new information from him, the advice that everyone has given still applies. What's stopping you?

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By ShirleyM
28th Jan 2015 18:07

It's tough love ...

... when I say that if you act like a doormat, don't be surprised if people wipe their feet on you.

I know you'll show him that you are not a doormat and will tell him to pay up ... or else!

ps. and charge him extra for the last minute information.

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By The Minion
28th Jan 2015 18:23

You should read
Snakes in suits
It is all about psychopaths in the work place.
Basically they ignore everything you say because it doesn't matter, they rely on your sense of guilt to get their own way and ... It's never their fault.
Tell him the accounts will now need amending, that you will amend them when paid and also when he has paid your amendment fee - up front.
If you need. Help with that, even though it is only a "small amendment" in HIS eyes, it is more complex than that IXBRL, CT600 and other jargon will help.
Then tell him that it will cost £500 plus VAT.

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By Arabita
28th Jan 2015 20:42

Of course im going to go back to him and say "no pay,  no way, no file". 

It's stressful dealing with such situations.  I will let you all know the reply. I have a feeling he will just ignore contents of  my email and  reply with a sign off as "thanks for understanding"!

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By Arabita
28th Jan 2015 20:45

Minion - he definitely does guilt trips. Doesn't ever have money. 

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By taxation4
29th Jan 2015 09:13

Backbone

Thanks for this thread - I'd been meaning to deal with someone like this for a while but this gave me the push!

 

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By youngaccountant
29th Jan 2015 15:24

phone

I would suggest you phone him instead of replying to his email to get things clear and settled straight away instead of having to wait for his reply... and maybe not getting the response you wanted anyway.

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By The Minion
29th Jan 2015 15:41

DO NOT CALL HIM

Sorry young accountant but i don't agree

Going back to the old "Yes Minister" series from years ago (sorry if i misquote)

"You did not speak to a person in authority"

"If you did speak to a person in authority it wasn't the person you thought it was" 

"If it was the person you thought it was they didn't say what you say they said"

"If they did say what you say they said...."

"You don't have anything in writing so you cant prove the call ever took place so you cannot rely on anything you think you said or the person said, who may or may not have been at the other end of the phone"

 

You will find that you wil be said to have agreed lots of stuff (yes you've guessed it, that you never said) and as a result the client will then say it is all your fault.

This logic line also applies to telephone advice from the various HMRC helplines.

Email (with delivery and read receipts) or special delivery letter.

Sounds over the top but in my experience (oh if only i had the time...) it is the only way.

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By User deleted
29th Jan 2015 16:19

Your reply

'Dear x,

Thanks for the information. I look forward to receiving the additional bank statements at your earliest convenience, and will at that point schedule in completion of the necessary amendments to the accounts and corporation tax return. 

Please also arrange payment of our outstanding fees (copy invoice and bank details attached) by bank transfer without delay so that the necessary filings can be made when the amended accounts have been agreed in due course. As you are aware from our engagement letter (copy attached), full payment must be received before any accounts or returns are filed. Thanks for your understanding.

Love and kisses,'

 

Oh yeah, and as advised by another wise soul, get the email received and read receipts!!!

 

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By petersaxton
29th Jan 2015 16:54

youngaccountant and The Minion

I agree with you both!

Phone him and then follow it up with an email.

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By petersaxton
29th Jan 2015 17:05

Emails

I've had problems with sending emails and various reminders and then clients ask why accounts have not been done! I tell them that I needed information and had asked for it in my emails. They don't actually say they didn't receive the emails but they don't exactly apologise for their lack of replies.

After 31 January I am going to implement a consistent chasing policy that will involve an email reminder after a week followed by a phone call the next day.

I had been chasing a client for two months to reply to my queries - they are not time critical at this stage but I didnt want to get too far behind with the work. Eventually I had to talk to her on the phone and finally, after another chasing email, she sent the information on Monday along with another email a few minutes later asking me to send the up to date information!

I'll look at doing the work after 31 January but with constant chasing in future.

 

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Replying to Montrose:
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By andy.partridge
29th Jan 2015 17:35

Procrastination

petersaxton wrote:

After 31 January I am going to implement a consistent chasing policy that will involve an email reminder after a week followed by a phone call the next day.


Is this instead of or in addition to revamping your website?
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By petersaxton
29th Jan 2015 17:49

Multitasking

Revamping website with left hand and implementing chasing policy with right hand!

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By ShirleyM
29th Jan 2015 17:56

Which hand for Digita?

You keep saying you will get the PM sorted, too, so it does reminders, costings, etc.

Peter, you need to learn to delegate. Just order someone to sort it out for you!

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By petersaxton
29th Jan 2015 18:06

Exactly

I just need to take on a few of the people who send in CVs and beg to work for free.

What could possibly go wrong?

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By The Minion
29th Jan 2015 18:20

No reply to questions after four weeks =
Invoice for draft accounts
When info arrives
Send invoice for finalising accounts
Works every time...

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By Arabita
30th Jan 2015 22:32

Thanks everyone

Bank statements have come a day later than promised.

Not likely to get amendments done in time (31 Jan!),so I told client accounts will be ready in a weeks time.

Of course I have sent a reminder email to him a few days ago explaining the outcome of not paying my fees (TR & a/c's not being submitted, penalties, interest on tax etc). Which is ironic as I just got his personal tax return penalties set aside.

 

I may remind him tomorrow in the name of humanity that his personal tax return isn't being filed unless payment.

 

I would refrain from phoning him, I prefer calling clients but with this one, it may turn out to be him saying please please, I haven't got any money, if I did I would pay you, you are first in the queue etc. Don't want to ruin my Saturday so will email.

Happy 30th Jan!

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By User deleted
31st Jan 2015 10:06

Nooooooooooooooooooo

You don't tell him the accounts will be ready in a week's time, you tell him you'll start on the amendments WHEN you've received cleared payment.

Otherwise you might as well lie on the floor by the door so that people can use you as a doormat permanently!

This is your email:

'Thanks for the bank statement. I'll process the amendments on receipt of your outstanding fees. Regards,'

I thought I was the least assertive person on the planet but I always, always get paid. (Because I always insist on money upfront in full!)

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By Arabita
31st Jan 2015 11:43

Gordon- I would prefer to receive payment and then finalise accounts but my letter of engagement says payment before filing. Good point for future work.

 

I will be incorporating elements of your previous post for payment prior to getting accounts approved

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Replying to Wilson Philips:
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By andy.partridge
31st Jan 2015 15:48

Of course

Arabita wrote:

Gordon- my letter of engagement says payment before filing. Good point for future work.

Does that mean if you do the work in April the client has until the following January before they need to pay you?
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By The Minion
31st Jan 2015 12:15

I think you are missing the point
Stop working!

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Replying to SXGuy:
By ShirleyM
31st Jan 2015 12:27

Agreed

The Minion wrote:
Stop working!

You haven't been paid a penny yet. You know the client is being difficult over payment and will use any means to avoid paying. You should be using any means to ensure you get paid!

He has been very dishonest in asking for work to be done if he does not have the means to pay for it, so why risk it?

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By DMBAcc
31st Jan 2015 15:39

Gosh....

.....don't you just LOVE humanity !!!!!!

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By Arabita
31st Jan 2015 18:07

Ha ha!

 

Client was on monthly payments  but soon stopped paying. I wasted more time every month chasing for payment than dealing with the miniscule (if any) HMRC correspondence. That was last year though.  

 

So for current year  it is Payment on account prior to preparing accounts. 

 

No reply re PT return fees. So no tax return has been filed!

 

See, am learning not to be a doormat!

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By Arabita
31st Jan 2015 18:13

I will say him to accounts are ready, please send payment. THEN once payment received will forward accounts for approval.  so sticking to my EL terms, he cant sue then. 

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By User deleted
01st Feb 2015 11:08

Handy hint

If a client stops paying you monthly - you stop working.

For the really simple version:

No Pay = No Work

Print it out, stick it on the wall, and chant it hourly until it sticks.

As soon as they realise you're an easy touch they'll take you for a ride - shove you out of your car, use your petrol up, flog your car, auction the contents of your house (as you foolishly left your house keys on the keyring with your car key) and do their best to flog your house too.

If you're lucky they might send you a postcard from the exotic location that they've moved to with the proceeds. But they'll probably not waste their money on the stamp as they know you'll trot to the Post Office and pay the charge for them.

 

There's nothing to stop you, once this year is complete, from changing the terms of your engagement letter - get them to sign a copy agreeing to the amendment obviously! 

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