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Post Info TOPIC: Money up front


Master Book-keeper

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Money up front


Very disappointed this morning, after bending over backwards to help a client by giving them an extra month to pay their already outstanding bill, payment hasn't been made still.  Will be taking court action on this one but I'm now going to have to start charging in advance, albeit reluctantly.  To be fair I haven't had two many non payers but this one was the largest.  (Not big enough to cause any major issues to my business fortunately) 

For the monthly ones it shouldn't really be a problem, I will simply work out the cost and divide by months left in that financial year, but for the yearly ones should I get all the payment in advance of starting work, or 50/50, or get payment when ready to submit?  Would be interested in your views.



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John 

 

 

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Hi John,

really sorry that you are having problems. Happens to us all at some time or other I'm affraid. At least from the soundf of it it's not a business threatening amount.

If they're self employed rather than incorporated you can adopt a legal right of lien over their books and records effectively holding them to randsom until your bill is paid. (You can't do that with limited companies as the companies act trumps our rights).

You may want to sell clients on the idea of standing order payments to break down annual fee's into less noticable chunks. Doesn't work too well when client fee's vary wildly month on month but where you know what the approximate annual fee's will be it reduces the risk to us whilst making things easier for the client.

Hope that you get payment before court. No matter what happens though I think that you now need to consider this client lost and start looking for a replacement.

all the best matey,

Shaun.



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Shaun

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Master Book-keeper

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Thanks Shaun, I'm aware of the lien aspect and he is a sole trader so will certainly not be releasing the paperwork until paid.

On the standing order front, yes a good idea even for the yearly ones, although they are mainly subbies with not much paperwork so a doddle to do.  One lad didn't pay me one year and apart from a letter threatening court action, I never followed it through.  A pleasant surprise then when the following year he humbly apologised and paid the previous year and the current one.  He now knows he has to pay up front.

 

Incidentally, I don't know whether you're aware, but the pre action protocol to taking a sole trader to court has changed from this month. Further details here.  http://www.ukbusinessforums.co.uk/articles/how-to-follow-the-new-pre-action-protocol-for-business-debt.650/

I only found out about it in September otherwise I would never have given him the extra month to pay cry



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John 

 

 

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Guru

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Hi John

With my end of year clients my terms with them are that I will complete their accounts and send them a copy, if they are happy then they sign a declaration to say they agree the accounts and pay me, I will not submit the return until I have been paid.

Touch wood not had any problems getting paid so far but had one client who is having family issues and has asked for more time which I am happy to give but I still will not submit the return until I receive payment.

Cheers

 

 



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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Thanks Doug, much appreciated.



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John 

 

 

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Leger wrote:

Thanks Doug, much appreciated.


 No problems John, what I should of added is that with my subbies if they are going to be due a rebate then I will get it made out to me then take my fee out before passing on the remainder to them

HTH 



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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What a bummer John. Yes keep hold of their paperwork. Before you start the court action - email and ring them daily for at least a week, maybe two!!!!!! They generally cough up to get some peace. Suggest a payment plan to spread the cost over a couple of weeks and if no response threaten court action. Do you have a deadline that is imminent for something - eg payroll, VAT? Im guessing not, although that often also spurs them into action. Good luck, I hope you get it sorted. For the ones where it is hard to get the payment up front when there is a lot going on (the awkward ones I mean) I have even suggested they pay me a set amount - say £500, then I will work until its exhausted, then tools down until the next advance (whilst telling them that if that is mid time critical episode and they dont pay quickly enough then that is there look out if a deadline is missed!)

If someone asks for more time to pay - always get them on some kind of payment plan so that you are at least then starting to cover your actual costs even if the eventual debt goes bad.eg you agree a month to cover it but get a payment each week.

Dont forget to mention the lack of payment/delays if you ever get a prof clearance letter (lol, yeah I reckon they wont find someone else until its really time critical, at which point you can phone them and try again for a payment!)

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Joanne  McCormick

Fallows  Hall  Ltd

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Master Book-keeper

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Thanks Joanne.  Unfortunately no deadlines.  I like your down tools bit, timed just at the right critical moment. You really have them by the you know wotsits then biggrinbiggrin

 

Hi Doug, Can that be done still? I read somewhere (and I can't find it now) that HMRC had stopped issuing refunds to agents.



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John 

 

 

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Guru

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Leger wrote:

Hi Doug, Can that be done still? I read somewhere (and I can't find it now) that HMRC had stopped issuing refunds to agents.


 Hi John

I done quite a few this year so I hope its okay, as far as I remember it asks if the person receiving the refund is your agent

If you can find anything that says it has stopped let me know please

Cheers 



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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I think I must have dreamt it Doug, because I can't find anything at all on it now.  



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John 

 

 

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Hi John, I had a client earlier this year, used up all my usual tactics to get payment on a 6 month old invoice and ended up sending a solicitors letter before action notice. They paid but not before ringing me up and calling me a 'despicable weazle ' for going to such lengths to recover !!!! They rang me last month to see if I will prepare their year end and suggested half fee up front..... I'm still thinking !

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Master Book-keeper

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That's terrible Julie.  Personally I would want it all up front (once bitten twice shy and all that) or at worst half now and the rest before submitting accounts.  In future I'm going to follow Doug's example and get payment before submission, but if I've had trouble with payment previously then it will be all up front.



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John 

 

 

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Master Book-keeper

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Hi Doug 

I wasn't dreaming after all, but from what I can see it's only new clients. If you've previously received tax refunds then it should be ok.

https://www.accountingweb.co.uk/any-answers/requesting-refund-to-go-to-agent-online

https://www.accountingweb.co.uk/any-answers/clients-refunds-to-agent-hmrc-changed-policy

 

 



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John 

 

 

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It seems that this is preperation for a stateside con finding it's way across the pond.

In the US they have a fraud issue with refund requests being made by people not associated with the client effectively stealing the taxpayers money from the Government. Think of it as an extension of identity fraud.

I can see the logic behind the Governments stance in that they just don't want such fraud occuring over here... At least not to the scale that it does stateside. Some frauds will innevitably succeed but at least they're trying to make it difficult for the fraudsters.

By the way, in case you think that this is just a small thing. In the US tax refund fraud for last year hit the IRS for $21billion!!!! (up from $6.5 billion the previous year).

For once I can actually see the logic behind something the Government is doing... Although, it doesn't help us in scenario's such as discussed in this thread.

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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.



Guru

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Leger wrote:

Hi Doug 

I wasn't dreaming after all, but from what I can see it's only new clients. If you've previously received tax refunds then it should be ok.


 Hi John

Thanks for the links had a read through them but nothing seems definitive, some posters say you cant anymore whilst others say you still can, I cant find anything on the HMRC site to say that it has now been stopped so I was going to ring them but there probably is not enough time left in the day!

I checked my records and I have had 8 refunds being paid directly to me for 2016/17 and they were all new clients, I also just checked on a clients tax return that is still open (fits in well to this post as I am still waiting for payment) and it still lets me fill in my bank details and also asks if I am his tax advisor.

Earlier in the year I also had a new client where I had not received the payment through so I phoned up and that was released into my account as well.

So not sure what to say really only that HMRC seem to be allowing some agents but not others.

Cheers

 



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Doug

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Master Book-keeper

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Hi Doug

In which case the mind boggles.  If you're getting the refunds ok I'd keep the status quo.

 



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John 

 

 

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Guru

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About 80% of our clients pay monthly DD via GoCardless so by their year end they have paid their fixed fee for the year.

We just lay out the terms at the initial meeting and so far had no objections.

Only ones we dont do this with is people who are due a tax refund where we receive the refund to our client account and deduct our fee before transferring the balance to them and some clients who's fees are less than £500 where we do the work, invoice for it and once paid we submit the tax return.

Though saying that we have some tax return only clients who pay as little as £15 per month by monthly DD.



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.



Master Book-keeper

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Hi Mark
For the number of clients you say you have got, if I recall correctly, have you considered traditional D/D. Does all the things and more than Go Cardless (if you pick the right bank!) but at a fraction of the price (small pennies I mean!)

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Joanne  McCormick

Fallows  Hall  Ltd

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Guru

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Cheshire wrote:

Hi Mark
For the number of clients you say you have got, if I recall correctly, have you considered traditional D/D. Does all the things and more than Go Cardless (if you pick the right bank!) but at a fraction of the price (small pennies I mean!)


 No never looked at traditional DD but might have a look at it as paid over £4k in fees to GoCardless in last financial year.



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.



Master Book-keeper

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Artois wrote:

 Hi John

Earlier in the year I also had a new client where I had not received the payment through so I phoned up and that was released into my account as well.

So not sure what to say really only that HMRC seem to be allowing some agents but not others.

Cheers


 Don't know if you remember this Doug, but I think I got it woefully wrong.  Did a taxfiler return the other week and spotted on the repayment section a tick box for acting as nominee.  Asked on Aweb, (which is where I misconstrued the info) and everyone thought it fine to act as nominee.

Much appreciate your help (as I did at the time) and will be putting this into action going forward.



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John 

 

 

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Guru

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Hi John

I have done a couple of subbie returns over the past few weeks but never had to use the nominee box for their rebate as they have paid me in advance but I did see that the option was still there, getting paid before submitting the return would always be my preferred method but I don't know about you but some of my subbies actually rely on the rebate money to pay me so that's where it comes in handy because without this option I would then have the hassle of chasing payments, however I do see the flipside especially with a new client who has to trust me with what sometimes amounts to several thousand pounds to take out my fee and pass the remainder on to them.



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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Thanks Doug, I will always check with the client first before doing it.  If they are reluctant then they can simply pay me up front and problem solved!! 

Do you have a separate clients account for money to go into?  I'm thinking that might be best.



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John 

 

 

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Guru

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Leger wrote:

Thanks Doug, I will always check with the client first before doing it.  If they are reluctant then they can simply pay me up front and problem solved!! 

Do you have a separate clients account for money to go into?  I'm thinking that might be best.


 Hi John

I know I should have a separate clients account set up but to be honest at the moment I do not, but I do make sure that all my clients who will be receiving refunds give me their bank details before the tax return is submitted so that when the money goes into my account (which I check daily whether waiting for a refund or not) I can transfer it to them straight away, so that it is in my account the shortest time possible.

However now I am getting busier I will be looking into setting up a client account.

 



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Doug

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Master Book-keeper

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I would say a clients account is a must. Dont forget to notify your PI insurer.

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Joanne  McCormick

Fallows  Hall  Ltd

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Guru

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Cheshire wrote:

I would say a clients account is a must. Dont forget to notify your PI insurer.


 Hi Joanne

I know slap on wrist for me, or face or even both

Do I need to notify my PI that I am setting up a clients account and holding their money?  



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Doug

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Master Book-keeper

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Hi Doug
Some PII insurers will want to know -holding clients monies is risky if you dont have the right controls plus can open you up to litigation in the event of disputes so sorth checking with them.

Now that I think about it as well, I think there is also a question on the HMRC MLR thing too.

If you are covered by a prof body they will have instructions - worth having a look at these

www.icaew.com/en/technical/practice-resources/practice-regulation/clients-money

www.aat.org.uk/about-aat/professional-standards/aat-licensing

Plus of course you will need to sort things out with your Bank.


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Joanne  McCormick

Fallows  Hall  Ltd

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Guru

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Cheshire wrote:

Hi Doug
Some PII insurers will want to know -holding clients monies is risky if you dont have the right controls plus can open you up to litigation in the event of disputes so sorth checking with them.

Now that I think about it as well, I think there is also a question on the HMRC MLR thing too.

If you are covered by a prof body they will have instructions - worth having a look at these

www.icaew.com/en/technical/practice-resources/practice-regulation/clients-money

www.aat.org.uk/about-aat/professional-standards/aat-licensing

Plus of course you will need to sort things out with your Bank.


 Morning Joanne

Thanks for the information, I have had a look through my PI policy but cant find anything that mentions holding clients money but I will give them a ring on Monday to see what they say.

Thanks for the links I will have a read through them, I am covered by HMRC for MLR so will have a look there as well when I get the time, I was thinking I was not going to be too busy leading up to Xmas but how wrong was I 

Cheers



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice

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