Client is requesting to see my accounts - Sole Trader

Client is requesting to see my accounts - Sole Trader

Author
Discussion

Lexual

Original Poster:

511 posts

213 months

Wednesday 22nd February 2017
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A client who has placed a decent size order with me that I am expecting payment on in the next few days has requested to see my accounts for the last two years.

Up until this week I've been operating as a sole trader below the VAT threshold and just simply submitting my self assessment return. This week I enrolled to be VAT registered, but still operating as a Sole Trader.

What 'account' information should I be showing them, I've not really got any profit/loss balance sheets for the last couple of years, something I will do from now on, and get an accountant.

I've no problem them knowing I'm a sole trader, what would be suitable account info to share?

TIA.

Simpo Two

85,404 posts

265 months

Wednesday 22nd February 2017
quotequote all
I'd do nothing until the money's in.

singlecoil

33,580 posts

246 months

Wednesday 22nd February 2017
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Why show the client anything? Is this a particularly profitable order? Is sight of the accounts a part of the deal?

If yes to the last two, then there's little point in asking us, you need to ask the client.

hyphen

26,262 posts

90 months

Wednesday 22nd February 2017
quotequote all
Lexual said:
What 'account' information should I be showing them...

..., what would be suitable account info to share?
Ask them. By right you should be wanting to show them the minimum they have a valid reason to see, so best not to guess what they want and just ask them.

Or just drag it out a few days till the payment, seems a very strange request.

LordHaveMurci

12,042 posts

169 months

Wednesday 22nd February 2017
quotequote all
hyphen said:
Ask them. By right you should be wanting to show them the minimum they have a valid reason to see, so best not to guess what they want and just ask them.

Or just drag it out a few days till the payment, seems a very strange request.
I'm guessing they want to know if his business is solvent before handing over a sum of money? Being a sole trader it's harder to get info from Experian etc, in my experience anyway.

tight fart

2,906 posts

273 months

Wednesday 22nd February 2017
quotequote all
None of their business, I'd reply and ask for that individuals pay slip and personal bank statements..

superlightr

12,856 posts

263 months

Wednesday 22nd February 2017
quotequote all
are you asking for funds in advance of the order/production of the wigets?

if so they may want to see that you are solvent before handing over their funds for the order which you will then fullfil?


Eric Mc

121,994 posts

265 months

Wednesday 22nd February 2017
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People sometimes think that the only reason accounts need to be prepared is to satisfy the taxman. Of course, in reality, accounts should be prepared in the normal course of events for all sorts of reasons.

If a person HAS only prepared the bare minimum to fulfill their tax obligations, they may find themselves lacking in necessary accounting documentation if accounts are required for some other reason.

Having said all that, you are under no obligation to provide this customer with anything - as long as you aren't worried about doing business with him.

red_slr

17,227 posts

189 months

Wednesday 22nd February 2017
quotequote all
We get asked quite a bit. Mostly schools. They want to buy £200 materials and want to see our accounts, directors addresses, bank statements etc before they can send a BACS. I tell them to find another supplier. By the time I have filled in the forms, got all the info together the £50 profit in the order has gone.

Had a right ding dong with a school before xmas over it.

paul0843

1,915 posts

207 months

Wednesday 22nd February 2017
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I can only assume that you have asked for an upfront payment.
They want to make sure they are dealing with someone who's solvent.
Imagine paying a deposit and the company/trader goes bust.
Not a strange request imo..

KevinCamaroSS

11,629 posts

280 months

Thursday 23rd February 2017
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Indeed, your customers are a major stakeholder in your business. Not unreasonable for a new customer to see proof of solvency before committing money up front. Often required to get on a preferred supplier listing.

Simpo Two

85,404 posts

265 months

Thursday 23rd February 2017
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If your accounts don't stand scrutiny and you feel there's a risk they may cancel if they see them, complete the contract as planned and then they have little choice but to pay regardless of what your accounts are like. The matter is then irrelevant.

Have they said payment is dependent upon sight of accounts?

Lexual

Original Poster:

511 posts

213 months

Thursday 23rd February 2017
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It's a large order, I have a PO from them for c.£35k. The client is a fairly decent size NPO and I am requesting payment up-front, or at least 50% which is what we're trying to agree on.

I am a re-seller and so using a few of my trade suppliers to fulfill the order and they require payment in advance as well but will look to agree 50% payment terms with them as well.

I'm speaking with their FD today, I've been pretty open with them about being a sole-trader/re-seller and at the end of the day all their items are coming from established and stable suppliers.

red_slr

17,227 posts

189 months

Thursday 23rd February 2017
quotequote all
That explains it I guess.

We have one client (very large company) and even though we have been established 60 years (been LTD 10) they wont deal with us directly. They use another supplier account who is also a customer of ours and we invoice them and they in turn invoice the client. Odd but its the only way.

We also have a couple of (ex!!) customers (in the building trade) who will only pay a % of their invoice and then pay the remainder on 90 days. After 90 days they then expect a rebate on the total invoice. Basically they want us to pay them for using our business. We walked away from them last year as it was just crazy, should be illegal IMHO.

LordHaveMurci

12,042 posts

169 months

Thursday 23rd February 2017
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Lexual said:
It's a large order, I have a PO from them for c.£35k.

at the end of the day all their items are coming from established and stable suppliers.
That's no help to them if you go bust with their £35k though is it!

We credit check all our suppliers using the same method as we credit check our account customers, even though it's nearly always us owing them money.

Eric Mc

121,994 posts

265 months

Thursday 23rd February 2017
quotequote all
So now you can see why having ready to hand formal accounts is actually a "good thing". Preparing figures purely for tax purposes is increasingly short changing an awful lot of businesses.