Accounts Receivable?

[equinecpa]

I'm curious, how many of you carry accounts receivable? If you do is it only for regular accounting customers or do you offer credit to all of your customers (including personal tax clients?).

I just posted in another thread about having to take a couple of ex-clients to small claims court to try to get paid. I have implemented a policy of getting paid upon delivery for my new clients but haven't yet changed over my existing clients to payment upon delivery.

Any suggestions for transitioning existing clients who are used to waiting for their refunds to pay? One other complication for me is that manyt of my clients mail/email me their information and I deliver it the same way so they can't just hand me a check for payment.
I do accept credit card payment via paypal and direct debit through Intuit Payments.

Just looking to see what others do, and find ideas to better manage my practice.

Carolyn

[ChEAr$]

In God we trust

This is my policy: all others pay cash before return is released. One deviance this year is the 1040 mailed to client early October which was on extension (which normally I do not do, but this was special case; residence in Iraq) and fee still not received
Accounting clients bring me their monthly work mostly with the monthly check already in the envelope. A couple send check by end of month.

It had been many years since I had had a check returned by client's bank (about 6 I think), but this year there were two! gasp. Of course each client brought me cash to include the 5$ bank charged me.

As for rep clients, the engagement letter is signed by client and retained of at least $200 paid up front. Then after that used up, client is billed for added hours. Any default in payment means default in my work.

[equinecpa]

Chear-you crack me up "-In God we Trust-this is my policy". Good one and point well taken!

So here is my plan:

I'm going to start using engagement letters for everyone so I have a "contract". Included with the engagement letter will be my terms -payment upon delivery.

The worse thing is the majority of my receivables are "friends" -it seems those I know best deem me less a priority in getting paid. These are the ones it's going to be tough enforcing when I deliver. Do I just need to cowgirl up and get tough?

[luke]

YES you need to cowgirl up! My psychologist wife tells the story about the "lady of the evening" client who overheard my wife lamenting about not getting paid for her services. The "lady" told her - "one thing our profession learned in the beginning, always get paid up front"!

[luke]

Seriously tho - most of us have had the same type of problem at one time or another - A "gentle" letter stating your "new" terms will work! (may want to say something like "due to problems and expense of collections..." - ALSO be sure to put in the letter "No Exceptions", otherwise you get some those "friends" who will say, but I didnt think that applied to me...)

[Jiggers]

I had worked for a CPA firm that billed at the end of the month. When I went out on my own, I followed the same procedures.

Over time I have required new clients to pay when the return was picked up.

Where I have had collection problems were with long-time clients who ended up owing the IRS or were having business problems and just put me on the back-burner. Some I collected from, others I didn't. When I have a slow paying client, one that just sends me so much of their bill, I do add interest. If they end up paying just the bill and no accumulated interest, I just add that to my bill the next year and collect when they pick up the return.

I am using Drake and their EPS Financial to collect my fee when they get their refund. But I have some that will end up owing because they gave themselves a payraise during the year by changing their withholding.

How do you convert these older clients who are used to paying after I send out a bill at the end of the month to pay when when they pick up their return?

I can give the answer myself: prepare their bill and have it with the 8879 when they review and sign the return!

[Jiggers]

Client, and now probably ex-client, convinced me yesterday to start collecting BEFORE I e-file the return.

Widowed in 2010. Been doing her and her husband's return for years.

Usually just a simple return.

But not this year.

1. She had no clue on what to send me for their return. I had to get an extension based on little information.
2. Husband had several annuities that he was drawing on. I needed the 1099R's. His daughter got them as that is the address on the 1099R and hated his new wife, now his widow, and refused to give them to her. My client's attorney tried to get them. Refused. So we had to wait until the IRS posted them and could retrieve them using e-services. His daughter always received them in the past and always gave them to him, but not to her. Widow didn't inherit any annuity, just the life estate in the home she shared with her husband.
3. Widow received large oil leases over the last two years and invested them with a brokerage firm who invested in mutual funds. She disposed of most of them by the end of 2010. I was given a few monthly statements, but no 1099B and 1099DIV. Widow had no clue what I was asking for. Numerous calls to the broker were not returned. Finally talked to secretary and she said that my client didn't pay for the service to keep up with the cost of the funds. I threw a fit and she did FAX me 21 pages of 1099's and purchase and dividend reinvestment information. I had to calculate the cost basis of each sale, which included wash sales.
4. Widow sent me a few monthly bank statements. I was looking for her quarterly estimates. Missing the January 2011 statement and she had no clue to what I needed, or why. I had to wait until e-services posted that informal also.

Overall, my widow client has signs of dimentia or worse. Took many hours to do the return, including calls and e-mails and letters to her and her attorney. Her attorney agrees with this.

Billed her about $1,100 for 10 hours of work. She threw a fit. She wanted to know why she was even getting a bill. And didn't think she was going to pay it. And I will probably have to file in small claims court to collect. Her attorney did soak her for all the calls she made with him concerning her husband's daughter and my letters and e-mails. She paid them.

Not the first time I had this happen. But it is the last.

No more. Fees up front.

[taxxcpa]

In cases such as this, you probably should do like the lawyers do and get a retainer.
Once I worked for a consulting firm that normally billed after the job was completed, but one day a new client asked about how much retainer was needed. They got a figure and paid it.

[Jiggers]

In cases such as this, you probably should do like the lawyers do and get a retainer.
Once I worked for a consulting firm that normally billed after the job was completed, but one day a new client asked about how much retainer was needed. They got a figure and paid it.

Unfortunately this one and others that I have had trouble with are long-time reliable clients.

But when they turn on you, for whatever reason, you are their worst enemy.

[BOB W]

I just sent this out to some of my sloooooow clients..........


11/01/11
"Reminder> Account balances must be brought up to date in order for my office to continue and complete required work coming up and to close out 2011 records. Those records include: Sales tax returns, Payroll Reports, W-2s, 1099s, Corporate Returns and Personal Returns. The only function I will complete is to file your corporate extension."

[geekgirldany]

I've done that a few times with long time clients. Those few times I got burned and that is why I always get payment before anything is filed or picked up.

I had one client going through a rough time. He had been diagnosed with a heart condition and had personal problems going on. During that time he did not file Sales Tax forms for his business. The business made little to nothing because after he opened it is when he got sick.

I had asked him about notices. He brought some but no revenue agent to contact. I asked him if he had anything with a revenue agent's name. Nope. I tried to get the number but local office would not deal it. Said it was Atlanta's problem.

So I told him I would do zero returns and then ask for penalty removal. I proceeded to fill out two years of sales tax returns. Although zero returns it still took me around 5 hours to finish and print them.

Called him up and instead of charging $500, I charged him $200. He said he wasn't going to pay it because I told him I would take care of it. I told him he had to know I would charge for preparing the forms. He said he thought I would just call the state and get it "fixed". I told him this was getting it "fixed".

Finally he then said he had the revenue agent's name and number. I said "you have the name and number". "Yes". I proceeded to tell him to call her. He asked me what he should tell her. I told him anything he wanted and to find himself a new accountant. Hung up.

I was pretty angry at him but more at myself. I let me emotions of him going through some health and personal issues rule my better judgement. Won't happen again. I hate to appear like I do not have sympathy for people's situations but I just can't take a chances like that anymore. $200 bucks is alot for me.

[Jiggers]

Engagement Letters

I use engagement letters.

But with the problem of receivables, and doing extra work to help a client who has no clue on what is needed to get the return done, does someone have some good verbage to put in an engagement letter that basically says:

"If I take extra time to help you, you will pay more. If you don't get me the information within so many days, that I will put you at the end of my list of returns to do,"

You know what I am looking for. Any ideas?

[taxxcpa]

Fee explanation

Here is a shot at it. Maybe others can improve on this.

My fees are based on several factors. The main factor is the time it should reasonably take to do your return. Most returns will fall into that category. Some people have their information so well organized that I will charge less than the normal charge for that type return. Others, however, provide their information in a way that require a higher than normal fee for that type return.
If it takes me longer due to circumstances created by myself, there is no additional charge. However if extra time is required because information is received piecemeal or if several telephone calls are required to elicit information not initially required, the fee would have to be adjusted upward. Also long delays from the initial receipt of information and the eventual receipt of all required information, requires me to spend additional time for which fees upward would be adjusted

[equinecpa]

I use engagement letters.

But with the problem of receivables, and doing extra work to help a client who has no clue on what is needed to get the return done, does someone have some good verbage to put in an engagement letter that basically says:

"If I take extra time to help you, you will pay more. If you don't get me the information within so many days, that I will put you at the end of my list of returns to do,"

You know what I am looking for. Any ideas?

I echo these sentiments. These clients are the ones that provide me with most trouble. They are a scheduling nightmare. This is my list of what needs to be added to my engagement letter:

a) Payment upon delivery.
b) Timely returns take precedence over non-timely returns (ie if you didn't file last year don't ask me to do the return in April this year)
c) Fees are based on the information being complete. The more phone calls and emails and bookkeeping I do, the larger my fee. Also returns with complete information will take precedence over those that are incomplete.
d) If information submitted to me is not complete by (insert date) an extension will be filed for the return. If complete information is not submitted to me by (insert date) I cannot promise timely completion of the return.

For payment I'm willing to take cash, checks (current or post-dated), and credit cards as well as pmt from refund via fee collect (client pays an extra $15.00).

So let's share engagement letters. Does anyone have anything that comes close to covering the above? I want something that isn't too intimidating. Taxcpa-your paragraph below is good for dealing with fees but what about delays and how it affects date of completion?