paying for services provided by one company into another co
Discussion
We have company A and B providing professional services (both belong to a group of companies) . Neither have bank accounts and for convenience we therefore request payment be made to company C bank account ( not part of group above).
For most of our clients this does not appear to pose a problem. However one client's in house legal counsel is now objecting to this setup saying that they can only pay Company A's invoices into a bank account held by Co A etc because the appointment doesn't involve Co C (despite them having already made payment previously for Co A work into Co C's account.)
My question is this...is there a valid reason for their objection, or does it really matter where the money is paid given that professional indemnity etc sits with the appointment documents.
Thanks for your help
For most of our clients this does not appear to pose a problem. However one client's in house legal counsel is now objecting to this setup saying that they can only pay Company A's invoices into a bank account held by Co A etc because the appointment doesn't involve Co C (despite them having already made payment previously for Co A work into Co C's account.)
My question is this...is there a valid reason for their objection, or does it really matter where the money is paid given that professional indemnity etc sits with the appointment documents.
Thanks for your help
Apart from concern over money laundering issues - no.
However, a business is perfectly entitled to NOT agree to this type of arrangement if it goes against their internal money laundering policy.
Outside of what other businesses might think, having the money rightly due to one company being paid to another company makes the accounting for inter company balances extremely messy and could cause you problems regarding the disclosure of inter company debts in both companies' formal acounts.
However, a business is perfectly entitled to NOT agree to this type of arrangement if it goes against their internal money laundering policy.
Outside of what other businesses might think, having the money rightly due to one company being paid to another company makes the accounting for inter company balances extremely messy and could cause you problems regarding the disclosure of inter company debts in both companies' formal acounts.
Mattlan said:
We have company A and B providing professional services (both belong to a group of companies) . Neither have bank accounts and for convenience we therefore request payment be made to company C bank account ( not part of group above).
For most of our clients this does not appear to pose a problem. However one client's in house legal counsel is now objecting to this setup saying that they can only pay Company A's invoices into a bank account held by Co A etc because the appointment doesn't involve Co C (despite them having already made payment previously for Co A work into Co C's account.)
My question is this...is there a valid reason for their objection, or does it really matter where the money is paid given that professional indemnity etc sits with the appointment documents.
Thanks for your help
One issue that we have had in the past (and it may not apply here)....For most of our clients this does not appear to pose a problem. However one client's in house legal counsel is now objecting to this setup saying that they can only pay Company A's invoices into a bank account held by Co A etc because the appointment doesn't involve Co C (despite them having already made payment previously for Co A work into Co C's account.)
My question is this...is there a valid reason for their objection, or does it really matter where the money is paid given that professional indemnity etc sits with the appointment documents.
Thanks for your help
Company A was insolvent and administrators had been called in. Company A didn't want Administrators/Creditors getting more money than could be avoided so they asked us to make future payments (for work A had done) into a related company. Luckily we got a letter from the Administrators asking us that all money owed to A should be paid to them rather than anywhere else.
Just to add....
The customer would never actually know whether Company C's bank account belonged to Company A. All the customer would get is Sort Code and Account number.
If A wrote to the Customer and said something along the lines of "We have changed our bank account to XX-XX-XXX. please make all future payments into there" the customer would be none the wiser.
The customer would never actually know whether Company C's bank account belonged to Company A. All the customer would get is Sort Code and Account number.
If A wrote to the Customer and said something along the lines of "We have changed our bank account to XX-XX-XXX. please make all future payments into there" the customer would be none the wiser.
Thanks Countdown, you are along the right lines, but Client required due diligence on A and B doing, including their in house paperwork that specifically required bank details including name of account.
As I have indicated, all our other clients, big and small, have just got on with it and paid.
As I have indicated, all our other clients, big and small, have just got on with it and paid.
How are you managing Company C as dormant with transactions going in and out of its account?
Why not just open an account for Companies A and B - takes less than a week
As with others, I would certainly not do business in that way - sounds very suspicious...
What else is going on that you haven't included above which might explain why you are doing this - no business I know that transacts decides to not bother opening an account...
Why not just open an account for Companies A and B - takes less than a week
As with others, I would certainly not do business in that way - sounds very suspicious...
What else is going on that you haven't included above which might explain why you are doing this - no business I know that transacts decides to not bother opening an account...
Mattlan said:
Thanks Countdown, you are along the right lines, but Client required due diligence on A and B doing, including their in house paperwork that specifically required bank details including name of account.
As I have indicated, all our other clients, big and small, have just got on with it and paid.
You mean they were / are unaware so just paid up.As I have indicated, all our other clients, big and small, have just got on with it and paid.
TX.
Mattlan said:
Purple...none of these
Eric, hi hoped you would respond, appreciate your concerns, BUT , is there anything specifically legal preventing this happening
Despite what you have been "advised" above, there are specific legal implications preventing this, I'm surprised you haven't been picked up on this before.Eric, hi hoped you would respond, appreciate your concerns, BUT , is there anything specifically legal preventing this happening
CaptainSlow said:
Mattlan said:
Purple...none of these
Eric, hi hoped you would respond, appreciate your concerns, BUT , is there anything specifically legal preventing this happening
Despite what you have been "advised" above, there are specific legal implications preventing this, I'm surprised you haven't been picked up on this before.Eric, hi hoped you would respond, appreciate your concerns, BUT , is there anything specifically legal preventing this happening
Countdown said:
I'd be interested to know what the legal implications are. Back in the old days it was common for Company A to do the work and ask for payment to be made to Company C (where C was a invoice factoring company). is this situation different ?
Factoring is pretty much the only exception as obviously this is just a funding mechanism for the supplier, however, if needs to be contractually agreed in order to complete the contract (even though a customer can no longer enforce a ban of assignment for suppliers deemed to be small/medium companies, the legislation hasn't been extended to large companies yet).Gassing Station | Business | Top of Page | What's New | My Stuff