Invoice Payment

[Greenmantle]

Hi

Under my current contract I invoice weekly and get payed 2 weeks from invoice date. I am just going through a new contract which is invoicing monthly and then payment 30 days from invoice date. To me this sounds very bad. What do people think?

John

[illmonkey]

Normal, I'm on the same.

[boxst]

30 - 45 days from invoice date is normal.

[Greenmantle]

Ouch

didnt realise what a good gig I'm currently on.
Thanks for the input

John

[truck71]

Greenmantle said:

Ouch

didnt realise what a good gig I'm currently on.
Thanks for the input

John

Doesn't mean you shouldn't challenge it though.

[griffin dai]

Same here.

Work the month, invoice on the 30th/31st then get paid end of the following month.

[Terminator X]

To note that you're at risk from a "bad payer" to the tune of 2 months work eg do a months work send in invoice get paid at end of month 2; repeat. Worth being careful (vet them) who you work for on that basis.

TX.

[MadDad]

Same as my last couple of contracts, unfortunately most companies don't tend to differentiate between one man band contractors and other suppliers hence the reason we all usually get lumped into the same bucket! I had a contract with a large German company who paid on the 45th day every time!

[boxst]

MadDad said:

Same as my last couple of contracts, unfortunately most companies don't tend to differentiate between one man band contractors and other suppliers hence the reason we all usually get lumped into the same bucket! I had a contract with a large German company who paid on the 45th day every time!

Yes and then there are those companies that use invoice payment as a way of controlling cashflow so sometimes pay late. They do not distinguish between individuals who will not be able to pay their mortgage and large companies where it is painful but less of a problem.

[MickC]

boxst said:

MadDad said:

Same as my last couple of contracts, unfortunately most companies don't tend to differentiate between one man band contractors and other suppliers hence the reason we all usually get lumped into the same bucket! I had a contract with a large German company who paid on the 45th day every time!

Yes and then there are those companies that use invoice payment as a way of controlling cashflow so sometimes pay late. They do not distinguish between individuals who will not be able to pay their mortgage and large companies where it is painful but less of a problem.

Well as soon as you do the Ltd Company 'one man band' thing you ARE a business and should be treated as such surely? Not being treated as a business presumably means you're happy to be treated under IR35 tax rules? If that means you can't pay your mortgage then you can always consider a permie job with more job security.

Like any small business, its good practice to have a few months worth of turnover in the bank so you can deal with 45 day terms, lots don't of course but that's their Directors risk. If you don't want to treat on those standard terms (if you want to limit the impact of the non-payment risk) you are free to negotiate different terms or not take on the business.

[Greenmantle]

Thanks for all this info. I have been contracting for many years now but the last 3 years with the same client and so I was a little surprised at the invoicing terms. Obviously for me cashflow isn't a problem but credit risk is. The new client seems ok but when the company has been going less years than my own company then I always have a slight cause for consern.

John

[MadDad]

MickC said:

boxst said:

MadDad said:

Same as my last couple of contracts, unfortunately most companies don't tend to differentiate between one man band contractors and other suppliers hence the reason we all usually get lumped into the same bucket! I had a contract with a large German company who paid on the 45th day every time!

Yes and then there are those companies that use invoice payment as a way of controlling cashflow so sometimes pay late. They do not distinguish between individuals who will not be able to pay their mortgage and large companies where it is painful but less of a problem.

Well as soon as you do the Ltd Company 'one man band' thing you ARE a business and should be treated as such surely? Not being treated as a business presumably means you're happy to be treated under IR35 tax rules? If that means you can't pay your mortgage then you can always consider a permie job with more job security.

Like any small business, its good practice to have a few months worth of turnover in the bank so you can deal with 45 day terms, lots don't of course but that's their Directors risk. If you don't want to treat on those standard terms (if you want to limit the impact of the non-payment risk) you are free to negotiate different terms or not take on the business.

I wasn't complaining, simply stating how the world is! I always have several months contingency in the bank plus an additional bit set aside in case of the unforeseen tax bill. Once you become a Ltd company your money is not your money, you need to adopt a totally different attitude towards it.

The IR35 issue is another ball game altogether!!