Invoicing before work is carried out?

[escargot]

2 sMoKiN bArReLs said:

Simpo Two said:

'Thanks, here is your money'.



How each party accounts for it is up to them.

Except this is not usually the end game. Can I have the invoice for VAT/Tax/year end (delete as appropriate)

...and payment might follow some time hence

Except this is exactly the end game if you read the original post.

[2 sMoKiN bArReLs]

escargot said:

2 sMoKiN bArReLs said:

Simpo Two said:

'Thanks, here is your money'.



How each party accounts for it is up to them.

Except this is not usually the end game. Can I have the invoice for VAT/Tax/year end (delete as appropriate)

...and payment might follow some time hence

Except this is exactly the end game if you read the original post.

Ferzacterly

[Eric Mc]

RYH64E said:

Eric Mc said:

For "normal" traders, VAT Tax Point is the earlier of -

The issue of a VAT invoice
The receipt of the cash

What if you're on the cash accounting scheme?

Obviously different. Under "Cash Accounting" the VAT tax point is the receipt of the cash.

When I said "normal" traders, I meant traders who account for the VAT under the normal "accruals" basis, which is the fundamental principle underlying "true and fair" accounts.

[Birkin1932]

Everybody is being far too technical. In business cash is king, give the guy a bill, get the money in the bank and do the job.

What is difficult about that?

[surveyor]

A recent discussion on a membership forum that I belong to has centered around what happens when you are paid in advance - ie. before going doing the job - which is how most residential valuers work.

Some members believe until you have completed the work that this is in effect clients money. Therefore it belongs in a clients account, which creates extra accounting and membership costs for Surveyors. It's an interesting theory, although I'm not certain I agree with it.

[2 sMoKiN bArReLs]

Birkin1932 said:

Everybody is being far too technical. In business cash is king, give the guy a bill, get the money in the bank and do the job.

What is difficult about that?

Try telling that to Telford C.I.D. (in a cell)

[Eric Mc]

Or HMRC is they don't agree with the cut-off criteria being used.

[Birkin1932]

So your seriously telling me everybody that gets paid upfront is a criminal!

I've had it then, 80% of our work is made to order so we get 100% payment up front.

I'll start packing a bag :-))

[2 sMoKiN bArReLs]

Birkin1932 said:

So your seriously telling me everybody that gets paid upfront is a criminal!

I've had it then, 80% of our work is made to order so we get 100% payment up front.

I'll start packing a bag :-))

Nope silly. We're just saying it ain't as simples as you would have it.

[Birkin1932]

So I've packed this bag for nothing !!!!

[2 sMoKiN bArReLs]

Birkin1932 said:

So I've packed this bag for nothing !!!!

Is it stuffed with tenners?


(and I don't mean Pavaroti )

[StevieBee]

This is a very common practice when doing work for the public sector as departments try to spend the budgets before the end of the FY. Interestingly, it's a practice that has become less common over the past few years.

A note to the OP....Should you client actually pay you in advance of the work, do be careful to ringfence the money to cover any out costs needed to fulfil the order. It sounds like a 'suck eggs' bit of advice but is all too easy to spend their money on something else and find you then have issues when the order becomes live.

As an aside...

Back in 2000, we were doing some work for an NHS trust and was asked to invoice in March for work that would be coming through in May. This, we did and they promptly paid. We flagged this up and was told not to worry so we put the money (£15k) into a deposit account. May came and went, as did June, July....come October, we offered to re-pay them the money as the project was never likely to come to fruition. They had no means to accept the payment as they had done nothing to warrant them raising an invoice to us. We tried many times to give them back their money without success. We sold the business a year later (around the time that NHS trust merged with another) so out there somewhere, is £15k of NHS money that was spent for no reason whatsoever. Quite mad!!!