Discussion
When a client agrees they want a web site developed, and over the phone we both agree we will begin work at once, having agreed the amount etc... the last words usually being along the lines of "start work now then, im sending over the images you need blah blah..."
... I then raise a vat invoice. And wait for the bits we need to start, including a deposit.
The trouble is, people put web design to the bottom of their list of things to do, and the days turn into weeks/months, and sometimes it comes to pass that the client doesnt want a web site any longer.
What happens to me then, if the project is cancelled, from the point of view that I have already given a client a vat invoice?
... I then raise a vat invoice. And wait for the bits we need to start, including a deposit.
The trouble is, people put web design to the bottom of their list of things to do, and the days turn into weeks/months, and sometimes it comes to pass that the client doesnt want a web site any longer.
What happens to me then, if the project is cancelled, from the point of view that I have already given a client a vat invoice?
anniesdad said:
Can't you just issue a credit note to the same amount to contra. the invoice?
I trust you are well by the way.
Fine, cheers! I trust you are well by the way.
Got a list of 17 non/very late paying clients to contact this morning, but am otherwise keeping on top of things 
How do you mean... a credit note? Isnt a credit note something you issue a company when you HAVE been paid? My concern is that there is are a LOT of vat invoices floating about, some of which may not be valid as not every client goes ahead with a web site and pays a deposit. Life gets in the way, lots of time passes, then they decide not to start whatever new business they wanted to start a month (or year) later.
anniesdad said:
So, you issue them with an invoice and they decide not to bother going ahead with the transaction? A credit note would contra. this item surely?
A receipted invoice is passed on to the customer when payment is made, not a credit note. Or am I talking out of my behind?
Im really not sure. I use quickbooks 2001, if anyone has any suggestions. A receipted invoice is passed on to the customer when payment is made, not a credit note. Or am I talking out of my behind?
I had a little retail experience, and in my mind a credit note was something that was only issued to clients who had paid, and needed a refund in "credit pounds"
What are you billing for?
Are you genuinely due to be paid by the customer for a service provided?
If the bill is genuinely due, then you should insist on being paid. If they refuse to pay, you may want to pursue the debt legally.
If you decide it is not worth pursuing, you will need to write the debt off as a Bad Debt.
Credit Notes should NEVER be used as a means of cancelling sales invoices which are being written off as Bad Debts. Credit Notes should be used to cancel incorrectly raised invoices or correcting some aspects of previously issued invoices.
Are you genuinely due to be paid by the customer for a service provided?
If the bill is genuinely due, then you should insist on being paid. If they refuse to pay, you may want to pursue the debt legally.
If you decide it is not worth pursuing, you will need to write the debt off as a Bad Debt.
Credit Notes should NEVER be used as a means of cancelling sales invoices which are being written off as Bad Debts. Credit Notes should be used to cancel incorrectly raised invoices or correcting some aspects of previously issued invoices.
Eric Mc said:
What are you billing for?
Are you genuinely due to be paid by the customer for a service provided?
If the bill is genuinely due, then you should insist on being paid. If they refuse to pay, you may want to pursue the debt legally.
If you decide it is not worth pursuing, you will need to write the debt off as a Bad Debt.
Credit Notes should NEVER be used as a means of cancelling sales invoices which are being written off as Bad Debts. Credit Notes should be used to cancel incorrectly raised invoices or correcting some aspects of previously issued invoices.
Are you genuinely due to be paid by the customer for a service provided?
If the bill is genuinely due, then you should insist on being paid. If they refuse to pay, you may want to pursue the debt legally.
If you decide it is not worth pursuing, you will need to write the debt off as a Bad Debt.
Credit Notes should NEVER be used as a means of cancelling sales invoices which are being written off as Bad Debts. Credit Notes should be used to cancel incorrectly raised invoices or correcting some aspects of previously issued invoices.
No, he means that the co does send any info etc to him follwing the phonecall and really takes it no further. By this time Bob has rasied an invoice for the quote/deposit, but this is no longer payable as no work will get done. Credit note is perfectly correct here.
Perhaps you should hold off invoicing until you see some activity on their part?
Edited by Smartie on Monday 17th July 12:13
Then it seems an invoice is being raised even though no goods or service have been provided. In that case, I would question whether an invoice should be raised in the first place.
If it is only a "quote" rather than an "invoice", then there is nothing that needs cancelling so no credit norte is required in that case either.
If it is only a "quote" rather than an "invoice", then there is nothing that needs cancelling so no credit norte is required in that case either.
Eric Mc said:
Then it seems an invoice is being raised even though no goods or service have been provided. In that case, I would question whether an invoice should be raised in the first place.
If it is only a "quote" rather than an "invoice", then there is nothing that needs cancelling so no credit norte is required in that case either.
Got quite a few clients, so there are always some which turn into non-starters. Which is no big deal. Ive lost (or had projects delayed): If it is only a "quote" rather than an "invoice", then there is nothing that needs cancelling so no credit norte is required in that case either.
half a dozen times due to death
half a dozen times due to illness in the family
several times due to accidents, broken limbs, etc
dozens of times due to moving, divorse, partnership breakups, family woes, financial troubles etc...
We provide a service which requires them to give us the things we need to get started. The clients themselves ask for an invoice.... life gets in the way, we dont always get to start. Most people put their own web sites to the bottom of their "to do" list.
I just dont want the vat man asking me where the vat money is, having to explain we were never paid, if any of my clients try to claim on any of the VAT on their invoices. I mean... they could, if they were dodgy, right? (Im on the flat rate scheme, so I dont claim back vat anyway)
Edited by UKBob on Monday 17th July 13:56
maybe you should work on a retained basis!
Split the over all cost - something up front (that usually sorts the dross) a proportion when a draft is ready to submit and the remainder upon completion of the original task.
OBVIOUSLY you should compile a proper brief of what you have agreed in the first place - then there is no recourse if a client changes their mind!!!!
Khushy
Split the over all cost - something up front (that usually sorts the dross) a proportion when a draft is ready to submit and the remainder upon completion of the original task.
OBVIOUSLY you should compile a proper brief of what you have agreed in the first place - then there is no recourse if a client changes their mind!!!!
Khushy
khushy said:
maybe you should work on a retained basis!
Split the over all cost - something up front (that usually sorts the dross) a proportion when a draft is ready to submit and the remainder upon completion of the original task.
OBVIOUSLY you should compile a proper brief of what you have agreed in the first place - then there is no recourse if a client changes their mind!!!!
Khushy
Not sure if its just me, not explaining myself properly but: Split the over all cost - something up front (that usually sorts the dross) a proportion when a draft is ready to submit and the remainder upon completion of the original task.
OBVIOUSLY you should compile a proper brief of what you have agreed in the first place - then there is no recourse if a client changes their mind!!!!
Khushy
1) Its the dross which Im worried about. ie we have done no work, they have paid no money. BUT, they have a vat invoice. Which I hope they wont try to claim on.
2) Proper briefs are agreed. I only ever send out an invoice when negotiations are finished, and the client asks for one so he can pay his deposit so that we can start.
The problem is they dont always pay their deposits. We dont start (no problem there) but they still have a vat invoice.
I cant refuse to issue someone with a vat invoice upon request. They can refuse to remit payment without one though.
Eric Mc said:
If they refuse to pay then they are bad debts and you should follow the normal VAT Bad Debt process - which DOES NOT allow the cancelling of an unpaid invoice by a Credit Note.
But if after weeks/months of talks, we agree to start work on a web site for a company/chap tomorrow, and he agrees to send us company photos, logos, etc, and he asks for an invoice... but he fails to provide the work we need to get started, how can I possibly treat his non payment as a bad debt, when we have not even started, nor have we incurred any costs, nor have we done any work 
As I see it, they need some paperwork from you so they can raise the deposit payment. If they then don't go ahead, it's not a bad debt as such (because it was deposit, not services/supplies) but more akin to a cancellation. But if you've got proper vat invoices floating about then it's untidy, very untidy!
I'd be inclined to issue a pro-forma invoice/fee note for the deposit, this should clearly state that a VAT invoice will be issued once monies received.
Once deposit received, issue their vat invoice (for the deposit amount)
Once work completed, issue vat invoice for remainder due.
I'd be inclined to issue a pro-forma invoice/fee note for the deposit, this should clearly state that a VAT invoice will be issued once monies received.
Once deposit received, issue their vat invoice (for the deposit amount)
Once work completed, issue vat invoice for remainder due.
UKBob said:
I just dont want the vat man asking me where the vat money is, having to explain we were never paid, if any of my clients try to claim on any of the VAT on their invoices.
Are you signed up for Cash Accouting Scheme Rob, if not I believe you need to pay the Vat on any raised invoices regardless of if it has been paid or not, you then claim back later if it becomes bad debt. If you are on Cash Accounting then not a problem.
However for the longer term I would think that yes a pro-forma invoice would make things easier and then only issue a proper invoice later on when the job is properly underway.
S.
Touching Cloth said:
UKBob said:
I just dont want the vat man asking me where the vat money is, having to explain we were never paid, if any of my clients try to claim on any of the VAT on their invoices.
Are you signed up for Cash Accouting Scheme Rob, if not I believe you need to pay the Vat on any raised invoices regardless of if it has been paid or not, you then claim back later if it becomes bad debt. If you are on Cash Accounting then not a problem.
However for the longer term I would think that yes a pro-forma invoice would make things easier and then only issue a proper invoice later on when the job is properly underway.
S.
This is what I was going to suggest too.
If you are on the normal VAT accounting system, you should pay VAT on all sales invoices RAISED and claim VAT back on all purchase invoices RECEIVED.
However, if you are on cash accounting you pay the VAT on sales and purchase invoices only when they are PAID.
UKBob said:
I just dont want the vat man asking me where the vat money is, having to explain we were never paid, if any of my clients try to claim on any of the VAT on their invoices. I mean... they could, if they were dodgy, right? (Im on the flat rate scheme, so I dont claim back vat anyway)
Edited by UKBob on Monday 17th July 13:56
Hes on the flat rate scheme y'know!
Smartie said:
UKBob said:
I just dont want the vat man asking me where the vat money is, having to explain we were never paid, if any of my clients try to claim on any of the VAT on their invoices. I mean... they could, if they were dodgy, right? (Im on the flat rate scheme, so I dont claim back vat anyway)
Edited by UKBob on Monday 17th July 13:56
Hes on the flat rate scheme y'know!
Ah good point missed that one... however how does that work then, I know it is just set at a percentage of turnover but is that not still based on your issued invoiced or only is it on the money actually received as with cash accounting.
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