Accountant looking for personal guarantee

RichieRuin said:
The suggestion that I might be a fly-by-night is a bit of an insult to be honest.
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Apologies but I was not talking about you specifically. As regards my own suppliers I am not limited so it does not apply to me but I still take your point. As regards my clients I do advise them to seek PGs. I know most local hardware shops and builders providers all seek PGs. Leasing companies, banks drink suppliers and solicitors all seek PGs.

Unfortunately I am at the coal face of this particular problem. I am also a liquidator and see huge problems for both the liquidated and creditors. Some directors have behaved terribly and where this has happened my report will contain such conclusions. The debate arises due to the fact that payment by creditors is very poor with blatant refusal by many to pay for legitimate work done. My practice is no better or worse than others. The old style 'honour' system whereby the bills would be settled by a certain date is history. Builders used to pay before the Galway races, farmers and others used to always pay before xmas. Other countries have laws to protect suppliers. Ireland continues to refuse to take action. This system of credit must cease. Businesses should not be set up and funded by creditors. Businesses should not be set up without having prior proper capital in the shape of shareholder investment or short and long term bank borrowing.

I also have a system whereby if my work relates to the production of a tax or other return the return will not be submitted until I have been paid. Since I implemented these controls I have lost one client as a result of this policy and indeed my t/o has increased this year.

You queried if this was common practice - it is becoming more common. As regards moving to an accountant who does not have these policies in place you would need to question their ability to advise you when they cannot take these simple precautions with their own business. BTW the best of luck. I hope you make millions and that you and yours are happy and healthy.
 
As regards moving to an accountant who does not have these policies in place you would need to question their ability to advise you when they cannot take these simple precautions with their own business.
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I would suggest running a mile from any accountant that 'advises' signing personel guarantees for business related activity.
 
I would always advise my clients to avoid signing PGs wherever they can avoid them. Unfortunately it is becoming more the norm - especially with builders suppliers and leasing companies.
 
umop3p!sdn said:
I would suggest running a mile from any accountant that 'advises' signing personel guarantees for business related activity.
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I'd run a mile from an accountant who has an "ah sure pay me when you want" attitude. If they can't run their own business properly, what sort of advice are they going to give you?

A payment plan, partial advance payment or personal guarantee are a necessity nowadays.

I'd be sceptical about any company directors who feel they can use advisors as a source of credit.
 
I'd run a mile from an accountant who has an "ah sure pay me when you want" attitude. If they can't run their own business properly, what sort of advice are they going to give you?
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My accountant doesn't have a "ah sure pay me when you want" attitute. They are a very reputable firm that respects limited liability. I pay them in full, and on time.

I would always advise my clients to avoid signing PGs wherever they can avoid them.
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It's interesting where some accountants will advise against signing personal guarantees, unless it's their own bill. I would avoid any company that adopts this attitute or creates this general air of distrust.
 
it means accountants are being caught out in large PI actions and want to cover themselves and protect their insurance almost like a no claims protection

to ask you to PG fees and indemnify her work is effectively to say " i am suspect at my job and i am not of the belief that your business will survive" not exactly the type of people you want in your boat telling you to row this way or that

p
 

I think, after some 21 years in sole practice , that I am a fair judge of people commencing in business, or transferring from other accountants. I have not, as yet, ever requested PG's. However I fail to see who anyone should be expected to take on work "on good faith" when the company's owners can simply walk away in event of failure. Accountants, like anyone, are in business to make money, to cover their practice costs and, like everyone else, to meet their own personal commitments . ( we have families too you know ). Honour is admirable and I do place a lot, a great deal in fact on the client's honour, but at the end of the day,it alone does not pay the grocery bill. If the client has both faith and commitment in their business venture they should have no reason to object, should they? I mean they shouldn't expect others to have faith in them if they, themselves, don't?
 
Agreed. By not signing the PG the client is effectively saying I dont have faith in the ability of my company to pay. Why should I have faith when the client doesn't?
 
I'd sign a PG for a bank loan no problem, but for me books? I'd laugh at my accountant if he suggested it. Not that he would in the first place.
 
Forget about the banks, try opening a company account with a builders merchants in the last few years without a PG. ( even before the slowdown in construction )
 
Agreed. By not signing the PG the client is effectively saying I dont have faith in the ability of my company to pay. Why should I have faith when the client doesn't?
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If an accountant asked me for a personal guarantee, I'd immediately believe that they were some kind of amateur operation. It would not instil confidence in the service they offer, and it would create an air of distrust.
I would not do business under such circumstances.

We pay our accountants on time and in full, without ever signing a personal guarantee. We have the ability to pay, so that disproves the above quote.
 

Everyone takes on work in "good faith" when the owners can walk away - that's the nature of the Ltd system we have. Why should accountants get special treatment?

It has nothing to do with what the accountant deserves or what is right and wrong - the accountant is just another supplier of services to the business (should the director sign a PG for every single supplier?). It has only to do with what the market will bear in relation to PGs.

In the boom, everyone signed PGs for bank loans etc and that became the culture of the day. Recently, everyone has been getting in on the act. But the mere fact that this debate is taking place shows that there is a backlash against PGs gaining strength. The market is deciding that PGs are becoming less acceptable, and rightly so.

Just because a director refuses to sign a PG, it doesn't mean s/he has "no faith" in their business. It just means they are smart - why bother with a Ltd company if you are going to give away this legal protection to every Tom, Dick and Harry who asks you to? For what it is worth, try asking a director of an American company for a PG, and see how long he remains your customer. The culture is completely different over there.

To the OP - there are plenty of accountants out there looking for work. Ditch the PG-seeking accountant and get a new one. Remember, you are the accountant's client/customer. If you aren't happy with the situation, sack him and move on - there's loads of accountants out there......
 
"But the mere fact that this debate is taking place shows that there is a backlash against PGs gaining strength. The market is deciding that PGs are becoming less acceptable, and rightly so."

Umm. Having very considerable difficulty in following the tortuous logic at work there.

Business is business. Any of us who are in business are doing our very best to stay in business. One way of making sure you stay in business is by getting paid. I would have no hesitation in asking a limited company director for a personal guarantee. If the director would not give it, then I would rather not do business with him or her.

And I would rather stay with my trusted advisers who have served me well over the years than go to someone I don't know on the basis of an issue such as this.

mf
 

+1

Let's not forget that the OP's company is a startup...a startup which kicked off in the middle of the recession. I don't think it's unreasonable at all for the accountant in question to look for a PG. As other posters have alluded to, many suppliers (e.g. breweries, builders providers) insist on PG's from directors.

Instead of directing their ire at the advisors looking for PG's, people should look at the root of the problem which is directors who trade recklessly. Looking for PG's means the company/individual has clearly been stitched up in the past.

Like others within this thread, I would be wary of a director who kicked up a fuss about having to sign a PG or pay some money in advance. In my view, it betrays a fundamental lack of faith in their own business and an unhealthy view in relation to the veil of limited liability.
 
Accountants are free to ask for personal guarantees, and business owners are also free to chose a different accountant.

Business owners should not sign a personal guarantee for their accountant. Instead they should select a different accountant.

Simple.
 

Not necessarily.

What if the accountant in question has particular expertise that the business owner requires?

And as previously mentioned, personal guarantees are the norm in quite a few sectors.

The salient point is that the directors of a company are best placed to judge the creditworthiness of the business. Why should an accountant or solicitor be expected to take a leap of faith with a new business in the middle of a recession? Especially if they've been stung before. If the directors are unwilling to sign a PG (or pay in advance for the advice/service), why should anyone else have faith in the business? It's all about information...the directors have it while others do not.
 
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