Financially Strapped Client

[erchess]

I have a client who is indeed in financial distress. To help him out, instead of charging him by the form and entry or by the hour for keeping his books, I agreed to take a monthly fee with the amount subject to renegotiation if I turn out to be spending more or less time on him than I think. I even agreed to take a half fee for Jan with the difference made up in Feb. As a gesture of good faith, he gave me both checks. However Friday afternoon was the appointed time for me to cash the first check. Since we bank at the same CU they were able to tell me on the spot that the account balance was not sufficient to cover the check. I truly feel that I have bent over backwards for this guy and honestly I don't see why I should push myself to get out his payroll. He has fewer than ten individuals, all getting 1099s and the January check would have covered my normal fee for doing that with money to spare. The question of doing his payroll is moot atm because he has given me zero information. He has promised to get it up by Monday. I am not inclined to give him the work until his check clears. Am I being unreasonable?

[jimmcg]

Your client is using you as a bank for interim (or long term financing) and in the process is transferring his problem to you. Stop being such a generous person and tranfer his problem right back to him where it belongs.

[ChEAr$]

C O B

!

(cash on the barrelhead)

[Jiggers]

Cash

You don't have the following sign in your office?

"In God we trust, all others pay cash!"

Seriously, you hold the upper hand. No dough, no work. And the dough must clear the bank first.

What type of business does he have? Does he collect on delivery?

I have had clients who were always slow paying, but when I went to their business I had to pay before I got out the door. That changed my policy. Some got upset.

[JohnH]

Repeat Post

I just posted this a few days ago on another thread, but I like it so much I want to post it again.
(Whoever said this before me should step up & take credit for it so I don't feel like I'm plagarizing you).

"If I'm going to work for free, I'd rather just take the time off"

[BOB W]

If his information is going to be filed late, you need to protect yourself from penalties. You should notify the client in writing of the penalties he will incur so that when it happens he doesn't point his finger at you. Also so that the IRS will not look for preparer penalties from you relating to information returns (1099 and such). You will have the warning letter in your file.

To be honest with you> you should dump this client.

[Jesse]

You don't have the following sign in your office?

"In God we trust, all others pay cash!"

Now I do! Thanks Jiggers - Gotta love it.

[dmj4]

I would tell the client that the check I tried to cash would not go through. I might give him one more chance ONLY if you feel like his money is going to be worth the work on your part.

I am bad about feeling sorry for clients. I wish my company would make me charge a certain rate for the taxes instead of leaving it up to us, to a certain degree. If they did, I would get my money and if the clients thought it was too much, they could choose to go elsewhere. The way it is, I am stuck with many clients that are not paying the full price sheet amount. Many of these clients that pay less are the ones that I have felt sorry for over the years or the ones that have had their tax return grow to many forms.

Donna

[veritas]

EZ Financing

100% percent down and nothing to pay!

[erchess]

[QUOTE=Jiggers;49363]What type of business does he have? Does he collect on delivery?

He sells very expensive water and air filtration systems and most clients pay nothing down. The finance company pays him contract sales price minus 11% and collection is entirely their problem. I forget the interest rate the customer pays but it struck me as low as did the minimum monthly amount. He also does not pay up front for the parts that he buys to put in homes. His sales people sell the system then the system is put in and he gets paid and only then does he pay everyone to whom he owes money. His financial problem by the way is over spending as a family rather than shortage of money. The point of the business is to try to get his two adult sons who live at home and who he apparently supports to generate some income. He has a small pension and a social security check. His wife has a social security check, a pension from being a teacher for 35 years, and pay from a full time job at Wal Mart. Oh I should mention that on my "to do" list for him is by the end of May to put his business plan in writing. He has explained it and I believe I understand it but as all of us here know, banks and other investors want it in writing. The financier so far has not asked for that but he is apparently an old friend with whom my guy has a history of mutually satisfactory business relationships.

In regard to another post, what is the penalty for late 1099s? I thought it was very low and seldom assessed. I had inferred as much from the frequency with which I assist clients who have not received theirs.