@Easyzen
T1, T2, and bookkeeping client failure to pay, haggling over price, scope creep, and chasing after documents are the biggest learning experiences I have encountered after moving from large corporate accounting systems implementations mainframe and server based to small business bookkeeping, and, corporate and personal tax prep.
It was a huge personal growth opportunity. This is what has helped me:
1- High level – Forgive myself for those occasional times when I still get sucked into their drama or pity them. Collect what I can. See the remainder as a gift them and a lesson to me. Refine my personal and business boundaries and procedures. Work on my spidy radar to detect and reject potential problem clients. Maintain checklists, criteria, and procedures to avoid issues. Work on retainer whenever possible or over a certain dollar amount. etc.
2 - Communicate. Be upfront with my expectations. Illicit their expectations. Accept cash, etransfers or credit card payments for personal tax.
3 - Don’t efile until paid.
4 - Develop a strong backbone and rock solid boundaries. Work on mindset, stress release, and emotional fulfillment outside of work. For me it is walks in nature, etc.
5 - Mindset — I own this. I don’t know better. Now I do. I won’t repeat this. What systems and procedures can I put in place to avoid this in future.
6 - Procedures - Get signed upfront engagements with price estimate or fixed price. Be quick to resolve or move on. It’s bad enough if the stiff you. Even worse if you let them rob you of your time and energy in upset. If in doubt go to their bank to get the check certified. You can keep presenting the check until it clears. Do not deposit the check at an ATM or at you bank unless and until you are certain that it will clear. If it is a larger amount be prepared to go to small claims court.
Wishing you a great finish to this year’s tax season.
I did some professional development this year around workflows and office management (always a good idea to get new ideas even if you’ve been doing this for +20 years!), and one suggestion was to bill in advance the total amount of the expected invoice. You can always refund/rebill for the difference if there is one, but apparently the person giving the PD had a lot of success and clients loved it because once they were done they were done.
I didn’t do it this year, but new clients (corporate and personal) next year I think I’ll be doing a deposit system.
Many years ago, a potential client came with two shoeboxes. The boxes were full of old, wrinkled receipts and some bank statements.
I started to look at the papers and tried to be professional. I asked, “Do you have the information about your consulting business revenue?” He said, “Oh, I think I sent this to my old accountant last year by email. Can you use that?”
I told him why he needs new and correct revenue for this year. He said yes and took out a CD. He said, “Maybe there is something on this CD. Or maybe it is my son’s Playstation games.”
Then he said, “Can you finish my taxes today? I am going to Hawaii tomorrow morning.”
I politely told him I couldn’t help this time. I wished him a great trip to Hawaii.
At this point, I know the vast majority of my clients well and referrals are coming from them, so I have never worried about this.
My remote clients always pay by e-transfer, but I don’t wait for it. I file when I get the signatures.
The vast majority of my in office clients pay when they are here.
A few are lower income and/or students who ask if they can pay when they get the refund. I’ve always let them. I was broke and trustworthy once too. I’ve had to email reminders to a couple, but that’s because they must be ADHD or some such. Truly forgetful in general. They have always apologized profusely and paid quickly.
So far, after 6 years in business for myself doing it this way, I’ve never been burned. I figure if I ever get burned, I just won’t see them again.
I’m much like you, @Stargazer. My clients have all been with me for years and I only accept referrals. I don’t take people off the street. In fact, when clients are messaging me about a potential referral, I tell them to let the person know to leave a message when they phone and I’ll return their call. There are so many spammers out there that I don’t answer my phone unless I know who’s calling.
I also have clients who pay me after receiving their refund, and there are a small handful who hold off paying until the following year, but they all eventually pay me. I only have one outstanding invoice from last year from a returning client who hasn’t contacted me this year yet, and I have no doubt it will be paid this year too, if not by the client, then by his mother.
I’ve only been burned once years ago for $40.00 when a very low income person showed up at my door unannounced asking if I would process two years of very simple tax returns for them and I charged them $20 for each year because of their very low income and the simplicity of the returns. They had no money to pay me and never returned in future years. So not a big loss and nothing to complain about because I know I was helping them out and they could have had it done for free at one of those free tax clinics. I wrote it off as bad debts.
Ditto I’ve had the odd one that slipped away, but that’s on me b/c I didn’t bother to send reminders & now they’re either dead or otherwise gone. I’ve been working with most of my client for many years (newer ones are < 1 decade) and I know they’re good for it…
Over 40 years on my own have had a few bad ones here and there, but probably less than 1%.. So don’t worry about it. Always have had the policy to file when signed, whether they have paid or not. With the possible exception if I sense that someone may not be trustworthy, but that is rare.