This is a situation where you have to phrase things properly. Plaintext passwords is not something you phrase as "bad practice". It's something you phrase as broken, something that simply can not be done. You must make your contract contingent on fixing their password storage, it is not optional. That's not to say you can't have a friendly discussion about why it can't be done, but you must make it clear that you won't do it, no matter what.
Then the question becomes how do you convince the business folks that it is not a valid solution. This should also be fairly easy. Find the decision makers, and bring them to a machine where you have the database query browser open. Type out the query "Select password from credentials where username ='DECISION_MAKERS_USERNAME'", then have the decision maker execute it (be polite and don't watch the screen as they do it) Explain that any employee with database access will be able to do this. Generally I would think that would do the trick, but if you need to do further convincing explain that a large portion of users share passwords across applications, and that any employee would be able to break into things like bank accounts, email accounts, etc with it. If that still isn't enough, explain examples of lawsuits and fines for companies that have done this.
Whatever you do, don't explain the technical details of any of it. Just show the consequences. Don't explain hashes, salts, or use words like "plaintext". Just explain that is it is now, people can see passwords, and that it will be easy to change it so that nobody can see the passwords, but they still would work.
If you can't convince them, don't take the client. And you should probably warn the users of the app that their passwords are not securely stored.