Invoicing beyond the financial year
Invoicing beyond the financial year
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BliarOut

Original Poster:

72,863 posts

269 months

Tuesday 15th May 2007
quotequote all
A customer wants twelve invoices in advance, each one due on the first of the month so that they can set up an automated payment to us.

This means entering invoices on the system beyond the current financial year end. Is this ok or will it cause me any problems/early early VAT liabilities etc?

Plotloss

67,280 posts

300 months

Tuesday 15th May 2007
quotequote all
Presumably if you're cash accounting it wont make a difference for the VAT as its not due until the money comes in the door?

BliarOut

Original Poster:

72,863 posts

269 months

Tuesday 15th May 2007
quotequote all
I've no idea if I am paperbag Although I don't think we are according to my copy of Sage...

carrera2

8,352 posts

262 months

Tuesday 15th May 2007
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I'm pretty sure Sage want 'see' them for VAT purposes and they won't fall into the period.

dadofbud

589 posts

239 months

Tuesday 15th May 2007
quotequote all
[quote=BliarOut]A customer wants twelve invoices in advance, each one due on the first of the month so that they can set up an automated payment to us.

The vat falls payable within the quarter that you raise the invoice if your not cash accounting, but why do they want to do this , its very simple to pay you by crerdit transfer each month, and why so complicated whats wrong with DD or SO and you raise the invoice each month, is your client a Nigerian Prince by any chance


Edited by dadofbud on Tuesday 15th May 17:57

david_s

7,960 posts

274 months

Tuesday 15th May 2007
quotequote all
As I understand it, the profit is made at the date shown on the invoice, can you make accruals for sales?. So if you want the profit in this year raise a single invoice now, if you want some of the profit in next year then raise 12 post dated invoices.

As said, if you are using cash accounting (only paying the VAT man when your customers have paid you), it doesn't matter how you invoice.

davidy

4,492 posts

314 months

Tuesday 15th May 2007
quotequote all
BlairOut

You are opening youself up to sorting out bad debts on this client account, if the client stops paying after 6 months what are you going to do? You then have all the bad debt VAT reclaim issues etc

ALL of the DD/SO's I have coming out of my business account, I eceive an nvoice on a monthly basis, you should do the same.

Raise ONE invoice now, for the first month and for each month in the future raise an invoice which will automatically get paid by the clients DD/SO. If the client doesn't pay for some reason then you are only one month out.


In answer to someone else's question, yes you can defer the profit from invoices raised in one year into the next year, but you should have legitimate reasons for doing so (EricMC will explain better), but the ones we have used, is that either the job is incomplete or you have an ongoing contingent support liability.

davidy

Leftie

11,838 posts

265 months

Tuesday 15th May 2007
quotequote all
BliarOut said:
A customer wants twelve invoices in advance, each one due on the first of the month so that they can set up an automated payment to us.

This means entering invoices on the system beyond the current financial year end. Is this ok or will it cause me any problems/early early VAT liabilities etc?


Does your year and this planned year coincide? If not, will they be shown as debtors at your year end if you haven't yet been paid. Also, if you haven't done the work yet that would really confuse things as you wil have incoived at year end for workmyoub haven;t done yet which is the opposite of under declaring?.

Eric Mc

125,763 posts

295 months

Wednesday 16th May 2007
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Accounting Standards would state that you shouldn't really bill for work not yet done.

I would raise a bill each month in the normal way to match each direct debit/standing order received.

If you did bill in advance, when you prepare your annual accounts, you would show a large debtor in your trade debtors - for the amount of the unpaid bill remaining outstanding at the balance sheet date.

However, you would also have to show a creditor in your Current Liabilities to take into account that part of the invoice raised which relates to work that will be carried out in the next financial year.
This makes sense as you would not want to show the full value of the Sales Invoice as current year sales. If you did you would:

a) overstate your sales for the year

b) overstate your profits for the year

c) overstate your tax liabilities for the year