Discussion:AARRGGHH Non-paying clients

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Discussion Forum Index --> Business Growth Community --> AARRGGHH Non-paying clients


Sandysea (talk|edits) said:

12 April 2006
Just an AARRGGHH. I have had a total of (3) clients who have paid me thus this far for tax season. I am owed on about 40 clients, but I am holding 3 bad checks and the others have yet to acknowledge that they owe me anything at all. As well, a 990 client and an 1120 client now feel the prices are too high...want me to change it to my hourly rate for bookkeeping. Although they signed an engagement letter and accounting services form.

What on earth are we to do about things like this?

Sorry, had to vent :(

Chris2lane (talk|edits) said:

13 April 2006
Sandy, do you give the completed returns to the client without getting paid first? I make certain allowances if a client gets a big bill (maybe $1500 or more). In that instance, they can pay half at return completion and half at a later agreed upon date. Other than that, nothing leaves my office without payment for services. When somebody gets their car repaired, the mechanic isn't letting them take the car without pay. As far as the 990 and 1120, stand your ground. They signed the agreement, besides preparing the return is more complex than bookkeeping. Good luck.

HPTAX (talk|edits) said:

13 April 2006
I mean this with the best intentions...You can only change your habits not your clients. I personally don't like A/R, huge waste of time and effort. As for the prices, I agree with Chris - stand your ground. I have one of those and I too was asked to keep it under Bookkeeping. I did it for a friend and resent it. I don't want that for you.

Woodcraft70 (talk|edits) said:

13 April 2006
Been there and done that. My spouse says I'm too kind hearted. I deal with a lot of low income clients and they want to wait until they get their refund. Most do pay, but sometimes a little slow. Firm believer in the burn me once shame on you, burn me twice, shame on me. If they come back next season, tell them you will prepare the return only after payment for last year. Worked for me. Not too crazy about holding the bag for 12 months, but at least they did pay in order to get the next years return.

ZoeCPA (talk|edits) said:

13 April 2006
Sandy, I agree with the above answers. I always collect before giving them the tax return. The only exception is long-time clients that have moved - I'll send them the completed tax return and a bill.

Now, for the bad checks, Have you tried going to the bank that the checks are drawn on? I had one recently and left many messages with the client without a response. So I went to their bank, found out there were funds available, and got the cashier to issue a cashier's check!

Waynec (talk|edits) said:

13 April 2006
Pursuant to Section 10.34 of United States Treasury Department Circular Number 230 - Title 31 Code of Federal Regulations, I prepared the tax returns of the above individual and/or business or businesses. I signed them as PAID PREPARER and/or REPRESENTATIVE. The tax returns, including all attachments, were filed and attested to by the signature statement regarding penalties of law and correctness, and state that the return or returns are based upon all information of which I have any knowledge.

I have in separate letter stated the terms for prompt payment of the balance due. To date you have not complied with those terms. The amount due at this time is shown above. Unless I receive payment in full by _______ SPECIFIC DATE, I will be forced to notify the Internal Revenue Service and the YOUR STATE TAXING DEPARTMENT of the inaccuracy in the reporting of PAID PREPARER and REPRESENTATIVE information on the above referenced tax returns.

Waynec (talk|edits) said:

13 April 2006
Hope this helps you...Wayne

Inagpurwala (talk|edits) said:

13 April 2006
I had similar situation. Few advise me the same as above. Next year I am not giving out printed copy without getting paid first.Inagpurwala 22:37, 12 April 2006 (CDT)

Jokadah (talk|edits) said:

13 April 2006
Boy oh boy, after a few times of getting burned you toughen up. I've had clients try and beat me up over prices and I've learned to stand my ground. The worst were some of the small business clients I used to have, wanted to make payment arrangements, post dated checks, pay me after their refund came. The resentment builds and creates a bad situation. I allowed it to happen, thinking I was being nice when in reality I was allowing myself to be taken advantage of. One in particular was a hair dresser and wanted to pay me later this went on for three years, I'd get paid eventually. (Every year a different sob story) Finally I said no, when you do someones hair you expect payment at the time of service, I'm no different. I've weaned these clients out. Now with efiling, I tell them that I have to have the signed 8879s AND payment before I can efile. It's amazing how that works. I hold off on efiling their return until I receive their check and they don't get their copy until they pay. I do have some old A/R and I LOVE what Wayne wrote and will be sending out those letters in two weeks. Thanks for sharing that.

Bengoshi (talk|edits) said:

13 April 2006
Is there any professional rule regarding "holding a tax return hostage" while awaiting payment? Hopefully not! It's difficult especially when first starting out b/c you can't afford to be as picky about your clientele. But once you're able to, I think it's wise to carefully select who becomes a client. It's such a headache to have irresponsible clients, even though I sometimes feel sorry for them (and do my pro bono).

Lalva (talk|edits) said:

13 April 2006
I am starting out and so far ALL my clients have paid me when I give them the returns (if they don't pay I won't give them the return and no e-file). Only one exception. I let one person pay me when she receives her refund. Will see how it goes...She looks decent...

I am not so desperate for clients (maybe a little), but I think that it's not worth it to have non paid clients or head-ache ones.

Sw (talk|edits) said:

13 April 2006
I don't do it, but you could offer them the RT and have your fee taken out of that. It doesn't cost a great lot and you would be fairly sure you would get paid. If I had a lot of client that didn't pay, I think about it.

Tstolley (talk|edits) said:

13 April 2006
We rarely have our clients pay right away. Seems to work well for us.

One idea to help with unpaid bills. Become a credit agent so you can put the upaid bills on their credit.

Sandysea (talk|edits) said:

13 April 2006
Thank you all for your input. I know that I am a real softie and listen to the hard luck stories...gets me in trouble every time. The 990 and 1120 clients called today and oked my invoices and will be paying me. Next year they want it done hourly, but I don't think I will do them next year. I hate to have to explain why my fees are as they are: office rent, phone, fax, equipment, travel, printing, bank charges, software..postage and can I make a living too?

Thank you again everyone!

Jdugancpa (talk|edits) said:

14 April 2006
I don't require payment at delivery. Heck, during late part of tax season, I send the returns out without bills because I don't have time to generate them. I'll catch up on my billing next week. I charge interest at 12% after 30 days and have very little problem with uncollectible receivables. I bill religiously at month end, so if I didn't get paid last month they'll hear from me again with interest tacked on. Most of the time I get paid the interest, sometimes I write it off. I just want to communicate to my clients that I expect to be paid, and most of the time, I do get paid.

JR1 (talk|edits) said:

14 April 2006
I bill in advance, on the organizer, and ask for a check when they submit the work. Most do.

Budrok@Aol.com (talk|edits) said:

14 April 2006
Someone said it best. When a client asks me how long it took to do their taxes . I tell them all my life went into it!!!!!

Beengel (talk|edits) said:

April 14, 2006
JR- how do you bill in advance without knowing how long and what needs to be done? Do you get a deposit?

JR1 (talk|edits) said:

14 April 2006
My clients have usually been with me. I have standard fees for different kinds of returns, so I'll ask them if they're new just what kind of things they have, and assign my fee. It's a small risk, but rarely get hurt.

Beengel (talk|edits) said:

April 14, 2006
JR1- simple. I like that. So, as an example, if a client had a 1040, a couple W2's, minimal interest and dividends, a schedule A and a state return to be filed- what would you charge, and what general part of the country are you in?

JR1 (talk|edits) said:

14 April 2006
Chicago area...and that's a 300-350 for me.

Tess (talk|edits) said:

14 April 2006
the midwest, i am not a CPA, and have my office in my home with no employees. That type of return would be less than $100 for me. Also I doubt that H&R Block lets anyone go home without paying for their return. My clients are all word of mouth so I don't have many payment problems.

Chautauqua (talk|edits) said:

14 April 2006
Small claims court is a great last resort in collecting a delinquent fee. For less than $50, it beats a collection agency. I have had to do the small claims route twice, and in both cases the client paid before the court date. No longer a client, of course, after that.

Lalva (talk|edits) said:

14 April 2006
Who wants that type of client anyway?

Lalva (talk|edits) said:

14 April 2006
And yes, HR Block is good at getting paid. For low income clients they had the RALs where fees are taken from the refund. Some clinets agree to thoses so they don't have to advance the fee. For others, the clients pay before the preparer handes the return to them. Checks? No problem. No bad checks since they had this machine that takes the money directly from the checking account.

Inagpurwala (talk|edits) said:

14 April 2006
JR1 and Tess you are lucky people getting $100 to $300 for this kind of return. I am in California (Fremont), when asked $100 for this service, client go to "fly by night" preparer. Thye charge from $30 to $70. So far I have turned down negotiating fee for at least 15 cilents.Inagpurwala 12:25, 14 April 2006 (CDT)

Sandysea (talk|edits) said:

14 April 2006
I agree with JR and Tess; I am in a small town in Florida, and I charge this as well for 1040's. 1040 EZ is $35.00 and then upwards from there. My most expensive return this year was a corporate return with financial statements for the year and a state return for 1700.00.

Funny; I didn't think this thread would do much...I was only venting. But seems like alot of us out there are working for free or almost free. I don't mind "giving" a return to someone who is in need...it is my good deed for the day, but I also have to pay my bills and this is what I do for a living....

How is it that if clients work doing sales, marketing, construction, doctors, lawyers, etc. think they can make sense of their charges but what we do is worthless?

I got a knock in the head yesterday...my boyfriend gave his daughter money to pay me for her tax return this year...told her to pay me with that money. He asked me yesterday if she paid me knowing that I have so many who did not pay me this year....no she did not, then come to find out he gave her the money to give to me....what a slap in the face!! I will never do her taxes again...never!! OK done venting again :)

Mtmckeecpa (talk|edits) said:

14 April 2006
Sandy,

If you do any efiling with 1040s, 1120s, you can ask for your fee along with the return of the 8879, that works for me...I don't do that with all my 1040s but with a majority that efile and have refunds that is how I handle payment

Lalva (talk|edits) said:

15 April 2006
Inagpurwala, I live in the Bay Area too. I had so many clients that asked me my about my fees and then I never hear from them again. So they probably went to the preparers that you said.

I charge $125 for a 1040 with sch A, $150 for the above and some other forms. $200 for returns with rentals and $250 for returns with sch. C. I didn't have enough clients this year, but I had a few referrals. I am thinking about increasing my charges next year. A few clients have told me while handing me the check: "you don't charge enough..." And like someone said in another discussion if you don't value yourself no one will.

Jokadah (talk|edits) said:

15 April 2006
I'm also in the Bay Area (North Bay) and for 1040, 540, Sch A and efile I charge $188. I think my prices are fair, few complain and I've seen invoices from others that charge 350-400 for the same return in my area.

Lalva (talk|edits) said:

15 April 2006
It's probably on the cheap side if you compare it with even HR Block. But I guess it's the only way to get new client...

Nola999 (talk|edits) said:

15 April 2006
I bill what I think I can get away with. But as an example, for the above return, I vary my charge based on AGI, from 150 for a low income, well organized return to 300 for over 100K AGI. If Schedule B prints, I add another 20 for a few entries. It goes up from there. I also increase my fee if the client is obnoxious.

Of course there are some exceptions, some long time clients get a fee break...but only if they come in in Feb, not April 12. I'm a CPA and have had my own business 15 years, so that makes a difference, I've got a nice client base, so I don't have stress if I lose someone because of fees. I have many clients in the 500-700 range, and had one individual client last year with a bill over 2000....and I earned every penny!

You know if you double your fees you will lose half your clients.....but you will still be making the same amount of money with half the work.

Estock (talk|edits) said:

15 April 2006
This is fun. I have not had fun for three months.

I have my clients pay when they pick up or at the end of the meeting, after their taxes have been prepared. Been doing this for 5 years on my own, and the company I worked for previously did it the same way. My company services 1000+ clients a year and my accounts receivable is usually about $2500 by April 15th. I also have clients all over the country, who, gratefully, send in their payments fairly quickly or pay by credit card over the phone before I even send anything out.

I have usually 1 to 2 who don't pay up. I send them to collections.

Everybody seems happy to pay right away, and my individual returns are avg $150-275...and I always have corps/partnerships pay up when they pick up.

Does anyone want to talk about martinis? I think I'm gonna go have one right now before I tackle some last minute people...

Tess (talk|edits) said:

15 April 2006
I know i am reasonable and cheaper than most. I am in a rural area and some clients drive quite aways to get here or mail their stuff. I work out three days a week so they have to work around my schedule. and as i said i don't have much overhead at all. office is in my home and no employees, just a hubby that helps assemble and make copies sometimes. but i do make myself available all other days, weekends and evenings. only thing about this is your phone rings at home any old time. Would you believe last year we had a son get married on April 16th last year. I was the one in the corner sleeping after my first beer. not really, all went well. a martini sounds good. one of my pet peeves is when people ask what you charge, well, it all depends .......

Tess (talk|edits) said:

15 April 2006
I should have added to the above also that a CPA once told me ..... don't charge so little that it looks like you don't know what you are doing. charge enough so you are professional and in business. But i can still make almost $100 per hour on some that are W-2's, Schedule A and maybe a few other entries, EIC and addtnl child credit. I charge $85 for that along with the state return. i don't do any advertising, and my business grows each year, still small but i am doing 230 returns this year. around $300 is the most i charge. I do charge extra for book keeping that I do, etc.

Actionbsns (talk|edits) said:

16 April 2006
Couldn't resist this thread. I'm in Hawaii, on the Big Island, I charge $80 an hour to do a return up from $75 last year and next year I'm going up to $90. So far the only people who have complained have been the cold caller on the phone who is just researching costs. The other day I was at a client's when someone called on my cell just scoping out prices. I told her my hourly rate and she said she was hoping to get it done for less, pause, silence, then she said thanks for my time and never heard from her again. Almost everyone pays when they pick up their return, although there are some out there that for one reason or another, I wasn't able to collect. I'm confident they will pay though, they are business clients and they need me to continue doing their bookkeeping as well. Since I'm in Hawaii, every year I get a new client or two from somewhere else, often from the Bay Area, they will mention that my fees are a little low, to which I comment that I would be glad to charge San Francisco rates if they would like me to. I do bookkeeping work throughout the year and often a business return will get a little muddied, but I do try to separate out bookkeeping time as opposed to actual tax return time. I agree with what Tess said though, about appearing to be professional. I use La Certe on the REP basis so I always need to be sure my REP fee is covered even with the simplest return.

Any body going on vacation now? I leave for England for two weeks Wednesday evening.

Paula

Natalie (talk|edits) said:

16 April 2006
Paula, have you thought about charging for the REP fees? I think that's quite common.

Sandysea (talk|edits) said:

16 April 2006
A Martini? Sounds yummy. How about a chocolate martini? Or an espresso martini for the nights we miss sleep?

Got yet another client today (Easter)...I did his taxes years ago and he looked me up again. Questions, questions....how much will I get back? I don't have my stuff can I just give you numbers and you will put them in?

WOW: people never seem to amaze me!

MLG (talk|edits) said:

2006 April 17
Not to change the subject ... (I really love the espresso martinis) ... I've become very leary of new clients who tell me they don't have year's tax returns to give me. I feel much more comfortable when I can compare current year to prior year to see if I (or they) have missed anything important. One new client w/high AGI said I couldn't have his last year's tax return. Now I see his itemized deductions are limited and his charitable contributions are carried forward. So what about prior year carryovers??

Lalva (talk|edits) said:

17 April 2006
I had a couple of calls last night and today (Easter) and I refused to answer. I am tired of people calling asking for my fees and then say "do you mind if I ask you a quick question?" and then when they have the answer they thank me and never hear from them again.

So I thought, OK, it's Easter and even though it would be nice to have some more returns done I am not going to put up with this anymore. They should have called a month ago, or even a week ago. Why do they leave it for the last minute? I will bet that these are trouble returns too...

Sandysea (talk|edits) said:

17 April 2006
I also have people who don't have prior year returns but insist that they want to use employee use of car, etc. I have no way of knowing if they have depreciated it in prior years or what...so....I don't take the deduction unless they can tell get me a transcript or a copy of their prior return. They usually just say, ok...don't take the deduction. This leads me to believe that they KNOW this is something they cannot deduct for one reason or the other.

Easter...yeah. I got to my office yesterday morning to finish up some pending things. Wanted to make it an early day and just relax...but NOOOOO. A client walked in...didn't even remember it was Easter. I visited with him, took his stuff and decided to do his return for 2005 and 2004. Of course no 2003 tax return to give me, so some deductions I didn't take. Long story short, he is getting a great refund without all the b/s. But this guy called me 3 times yesterday wanting me to come back to my office at 7:00 p.m. so he could efile since he is getting a quite large refund. As well, he wants to write me a check and postdate it. WTF ever!!!

I politely told him I was done for the day and that I would work on it this week sometime....not good to piss off the tax person, but it amazes me what people will do for money!!

Natalie (talk|edits) said:

17 April 2006
Yesterday when I read the latest postings, I was chuckling to myself. I was happy I didn't have any last minute calls. Well, what do you know? There was a message for me this morning. Someone wanted to know if today was the last day to file and how does he file an extension. Oh, and it's not an extension to pay? I pointed him to the IRS website, but I have a feeling he'll be calling back later today.

NeubergerIncomeTax (talk|edits) said:

19 April 2006
This is this 1st time I got to read this posting hilarious. I have a completly absurd true storoiy, back in late Feb. cellphone rang @8:43 p.m. I picked up (mistake on my part)the man on other end of the line asks me if he where to purchase a television for $499.99 how much would it cost after sales tax. I was stunned at first but gave him the answer nevertheless, when I asked him did he need to schedule an appointment he said no! Maybe he was drunk it was saturday night I have no idea. He thanked me for my time and hung up. Glad to see I'm not the only one with absurd potential/clients.

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