All work and no pay

August 11, 2009: 6:14 PM ET

Handling the client that wants the goods but doesn't want to cough up a check.

Susan Lewis, Lancaster, Calif.

Can we legally hold a client's paperwork if they haven't paid their bill? We do their bookkeeping and they haven't paid in months. We haven't done any additional work for about two months, and now they are asking for their paperwork back. If we send it to them, we will never get paid.

By Kathleen Ryan O'Connor, CNNMoney.com contributing writer

Sending the paperwork back likely won't make a check materialize, but there are ethical issues to consider with holding it hostage.

Let's start first with trying to get paid.

Sharon Means, a certified public accountant from Cleveland who also owns a bookkeeping business, just dealt with a similar situation.

"I didn't send it back," she says. "I just kept killing them with kindness. Every week I would send an e-mail. 'Can you pay me some? A payment plan?' If you are going to have any work done in the future, they have to understand that you just can't keep dishing it out with nothing in return. It's the squeaky wheel that gets the oil, so you have to put yourself in front of this person."

Her tactic paid off. "We worked it out so he paid at least half, and then we set a schedule for paying the rest of it," she says.

The recession is making it hard for many people and businesses to stay on top of their bills, she acknowledges "That's the thing. Everyone is cash-strapped, I understand, but you have to keep up communication."

But do you have a legal or ethical obligation to return the client's work product, cash or no cash? Being a bookkeeper means you have little regulatory framework for your job -- unlike CPAs, who are bound by the American Institute of Certified Public Accountants Professional Standards. Violating those standards can lead to membership termination and disciplinary sanctions against certified accountants.

The relevant section of the Institute's standards code says, in part, that any financial records the client has provided you with should be returned on demand. Records that you've prepared yourself should also be handed over on request unless there are fees due to you for the preparation of those records. Supporting records related to finished work can also be withheld if you're owed fees for that specific work product.

David Bybee is president and CEO of the National Association of Certified Public Bookkeepers, a trade group for the unregulated bookkeeping field. He recommends that you give back any work papers that the client provided to you, such as year-end financial statements. But final reports that you produced do not have to be returned without compensation.

Give us your advice: Check out recent "Ask & Answer" questions.

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