Should we alert supplier to invoice us?

Should we alert supplier to invoice us?

Didn't find your answer?

We have a supplier in China - providing market research data since 2010. We have just found that they have not invoiced us since end of 2010 and 2 full years are outstanding, amounting to a significant sum. We can not pay this now because 1) we had not put that money aside (because they had not invoiced us) and because our business turnover has declined significantly since that first payment. We are not sure how to address the situation - the longer this goes on the bigger the problem if/when they invoice. But to alert our supplier that we owe them money now would be equally bad. Are there provisions to allow us to delay or spread out any back payments? How long after provision of a service are we liable to pay? If they can't keep track, why should we be expected to do so? There is a further slight complication which raises some concern. The first invoice was raised by the owner of the business and paid directly to his account - we received a letter of assurance that this money was being paid directly to him as the official representative of the business in China. I am wondering now whether this was a cover for not putting the payment through his company books. This would explain why their accountant has not raised any more invoices ..... ?

Replies (9)

Please login or register to join the discussion.

By mrme89
16th Apr 2013 17:28

I don't think you have any obligation to notify the supplier that they have not yet invoiced you. It is up to you to decide whether or not they will chase for payment and make a decision to write it off or not.

 

However, if you do not have the cash or mean to pay for the services, is your company insolvent?

Thanks (1)
Replying to mabzden:
avatar
By pigus
16th Apr 2013 17:49

Insolvent

Thanks for your reply. We are not insolvent. But to backpay 2 years of services now in one go would be a major impact that could damage our viability by detracting from critical marketing services we have invested in to reclaim market position

Thanks (0)
avatar
By Carolynne
16th Apr 2013 18:12

Should we alert supplier to invoice us?

As you are still using the supply they provide, I would in any case start putting aside funds to cover at least the services you are receiving now in a seperate bank account to avoid increasing any potential debts you cannot repay, else you will only be making the situation even worse for yourselves in the future.

I had a client recently who pays current invoices for a supplier, who asked him to settle an invoice he had never received going back 18 months, he did not open his mail and didn't see the demand.  They took this to the small claims court, and again he didn't open his mail.  Only after I visited and he gave me some of his mail to open, did we find that he had a limited time to settle to avoie a CCJ being put against his name (a sole trader).  This was a UK based company.

I do feel for you, as this must be causing mental anguish, but as it is a regular service, I also feel you should have been trying to put some funds away for this on the off chance they remembered to bill you.  As if you were owed the money - not only would you want it back, you would need it back. 

If you continue to receive the supply (as I fear if you stop, this might just generate that big invoice), I can only suggest if you have a surge in turnover and can keep putting money aside or the past as well, until you feel you have enough to pay them.  You can alert them then, if only to get the worry of your mind.  (Although I am unaware of the legal aspects of whether you should).

Thanks (0)
Replying to Tickers:
avatar
By pigus
16th Apr 2013 20:07

contingency

Thanks - you have made some very useful points. What makes this worse is that we really would like to cut back on the service in any case because the value of what they are providing is really not that great any more. But as you said, this would most likely precipitate that invoice! We will start to put aside for the ongoing service, as you suggested. At some point soon we will have to bite the bullet and be proactive, declaring that we wish to scale back and in the process we can perhaps discuss and negotiate a schedule of back payments which our reduced cash flow can cope with.

Thanks (0)
avatar
By cheeeetah
16th Apr 2013 20:23

Fair exchange

These backlogged invoices tend to show themselves when the accounts are brought into line and reconciliations completed.  Then the supplier will regard you as a cheat for saying nothing.  Bad for trust, that is.

I have had a few of these and when I contacted the supplier/contractor, he was impressed.  It built greater trust and loyalty towards my business.  You have received the service, and presumably it was worth the cash involved.... I think you should pay up.  It will come back to bite you in some other form, one way or another, if you try to cheat the supplier.

Thanks (0)
avatar
By pigus
16th Apr 2013 20:54

cheat

Thanks. Don't misunderstand me - I do not want to cheat. But, just as the supplier has not kept an eye on his client invoicing, we had lost track also - we have only just noticed this. The issue is not about cheating, it's about how and when we pay - we simply can not absorb 2 years of back payments in one go. My plan and hope is that the supplier will see a proactive approach from us positively, as you suggest, and so will be open to negotiation of a schedule of back payments to help us absorb the cashflow impacts. Seem reasonable?

Thanks (0)
avatar
By Andywho is fed up
17th Apr 2013 08:48

Late invoices

I appreciate your problems.   You could, however be proactive.   Approach your supplier.   Say that you want to cut the work they do for you and that they have not billed you for 2 years.  Explain, that because of downturn in business you don't have teh cash to pay all  the arrers in one go.   Say that you will pay for the reduced ongoing services on a pay as you go basis and agree a repayment plan spread over, say 24 months, to clear the arrears.

That way you can reduce future laibilities whilst still hopefully retaining the trust of the supplier by being upfront and honest.

Thanks (1)
avatar
By bernard michael
17th Apr 2013 09:04

How has it taken so long for this to be noticed?

Surely it would show up in your purchase ledger in the over 90 days column. Did your accountant accrue for the invoices in your Profit & Loss Account ?? If not your accounts are not showing the true position and you may have paid too much tax

Thanks (1)
By mrme89
17th Apr 2013 09:32

If you intend to pay, I would come clean and negotiate a payment plan. Leaving it for the other company to find out will only hinder a payment plan negotiation.  

Thanks (1)