Non payment - personal guarantee

I have a client for whom we did a bunch of work on his business books (last three years worth). He has not paid us but now wants us to do his personal taxes. He is willing to pay for his personal taxes upfront but not his business bookkeeping. He promises to pay when he has money and is offering to offer personal guarantee. I have no experience in this arena. Are his words or his offer for personal guarantee of any use? Is there any way to safeguard my interests or should I just cut my losses and move on? We are talking about $9k of outstanding amount.... *I feel foolish*

-Pete

Without sounding as though to impugn his character, I'd suggest to him that a payment on the old balance would be a good show of faith. $1,000 plus the personal tax returns now would work for me. Take too easy a stance now and the old balance may never be paid. Too hard a line and you run a risk of losing him altogether and with that any hope of collecting the old balance.

Thanks. I am just hoping that I am not digging myself in to a bigger hole

What kind of "business" is he running here? If it's not some kind of entity, like and LLC or a corporation, hasn't he already given his personal guarantee?

Going forward, I would not begin a new year until the past year's work has been paid for. I have one client that is always late paying. They are always on extension and file right at October 15. Every year I get paid in October for the previous year when I tell them that I can't prepare their return until the previous year is paid for.

I'm learning myself about slow to pay clients. When I worked for someone else, it used to fry me when I had a bunch of time in stuck in AR that was never paid. I worked on one account that had upwards of $15k at one point. Client would come in and sweet talk the partner about his latest big money deal, leave a check for a grand or as much as half the bill and a promise for the rest. This continued on year to year, but what really got me is the the first year we did a big carryback and claimed over $100k in refunds. Since I've left, I have no idea if the firm still has the client, my guess is that they do. I promised myself I would never let a client do this, but I've found that to be difficult, especially if a deadline is involved. I have one slow to pay that I did a little additional work for and sent out the product. There was a deadline, and we were getting close. They had recently paid the tax prep debt and I would not start the current project until it was paid. It was not a complicated issue (several $0 941/940 filings the last of which closed the accounts-$250 for 9 returns seemed pretty reasonable). I'm a little guy starting out, so every dollar that I don't get really hurts. Going forward though with this client I will ask for a retainer on projects like this. Some people will let you finance them if you allow it, and from what I've seen, once a slow pay, always a slow pay. Personal guarantees mean little to me, you can't eat a guarantee. Since they keep coming back, I think in my case and yours, I think we can assume the work is acceptable. I do however save all the thank you emails from them! I have a question on a related topic. . .posting next if any of you have some insight.

Some people will let you finance them if you allow it, and from what I've seen, once a slow pay, always a slow pay.

This is so true. I used to be fairly naive about this, but I learned my lesson from experience. Some of these taxpayers are professional grifters. And if they aren't paying the IRS, they aren't going to pay you, either.

I remember one guy in particular was crying poor to us, about how he couldn't afford to pay the bill, but I used to work at an optometrist's office when I was in HIgh School and the guy came in wearing a new pair of designer glasses--I know the brands because the high-end ones usually have a distinctive logo on the temple. Just the frames were upwards of $600, and I could tell that the lenses were premium ones, too (anti-reflective coat, etc). The glasses put him back a pretty penny. If he was "poor" he would be wearing something more affordable. I didn't mention that to him, but I refused to let him have the return without paying. He mumbled and grumbled but he handed over the payment.

A lot of people are scammers. Just because YOU aren't like that doesn't mean that other people aren't. It's kind of depressing when you start to see the world for what it is.

Yup, it's always fun when they don't pay their bill and you can see the distributions running out of the company like the stuff coming out of the back end of a cow in clover.. . .that and the new truck on the balance sheet and the story about how great their vacation was. . .one of the first things I check is to see what (if) they paid their prior accountant. If there is no entry for accounting fees at all or a longstanding AP balance, it's a huge red flag for me now. If they start to talk trash, I need to be able to see it in the books or somehow determine it's legitimacy or it's a no go for me.

Thank you, folks, for sharing your experiences. I did stick to my guns yesterday and got a promise to receive $5k by credit card today. Hope it goes through. So, I agree with all of you, we should not give in to their sweet talk. Thanks again.