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Can company a pay a bill for company b?

Can company a pay a bill for company b?

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can company A pay the bill for company B? so invoiced company B but got money from company A - is this ok?

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By jonharris999
23rd Jul 2021 15:12

It depends, but if you are the supplier (and not yourself companies A or B) there are only a small handful of circumstances in which this would matter to you - why do you think it would?

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Replying to jonharris999:
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By LucyLui
23rd Jul 2021 16:28

hi We're the supplier. I'm thinking about the legality/risk of invoices being paid by companies other than the company named on the invoice. Does it raise questions about money laundering? Is it a risk practice to get into? I mean, what happens if they claim it was a mistake and want the money back?

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Replying to LucyLui:
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By David Ex
23rd Jul 2021 18:35

LucyLui wrote:

hi We're the supplier. I'm thinking about the legality/risk of invoices being paid by companies other than the company named on the invoice. Does it raise questions about money laundering? Is it a risk practice to get into? I mean, what happens if they claim it was a mistake and want the money back?

Exactly, it's a legal issue primarily. A company can generally do what the directors approve but whether it's legally or commercially advisable is a different question. As you note, if everything goes as intended, it may be a non-event but what's the fall back position if it doesn't ...?

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By Hugo Fair
23rd Jul 2021 20:01

Agree ... but just wondered whether OP is VAT registered?
If this is a regular process then something smells - and its unlikely to be beneficial for OP if/when any number of things go 'wrong'.

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Replying to Hugo Fair:
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By LucyLui
26th Jul 2021 10:53

hi, we are VAT registered. Does that have a bearing?

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By Hugo Fair
26th Jul 2021 11:36

Honestly, I don't know (VAT is definitely my blind spot generally) ... but I did wonder whether your VAT Supplies would be in question if they're being paid for by an organisation that is not the one to whom you've issued the VAT invoice?
And, although we obviously have no idea of the relationship or transactions between companies A and B, I do wonder whether company B can claim VAT Outputs for which they haven't actually paid?

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Replying to LucyLui:
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By Leywood
26th Jul 2021 11:39

What did your customer say when you queried it?

You did query it, surely?

Do you know enough about the payer to check out their vat status?

What did your Accountant say when you referred it to them?

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Replying to Hugo Fair:
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By Leywood
26th Jul 2021 11:54

On the smelly front, could just be a complete disorganised shower running the show. One of mine ws hopeless, always getting debits cards mixed up. No, that is being generous, Im convinced he just grabbed any old card from his wallet without a seconds thought. Inter company would've looked a mess until I had a very firm chat with them.

Agree generally though, if it whiffs a bit, it could turn out to be a right old stink.

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By tom123
26th Jul 2021 12:01

Not an uncommon situation if dealing with groups of companies.
I don't worry particularly if I can see there is a connection between the parties.

If I cannot see any connection at all, then I would ask why.

On the whole, though, possession of the money is 9/10 of the law.

However, I would worry about future credit control issues if I couldn't establish who had the funds to pay me.

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Replying to tom123:
Maytuna
By DJKL
26th Jul 2021 14:59

Agreed, for the last 15 months I have been paying one of our company's invoices from an associated company's bank account.

The reason is the first company is set up as needing two out of four signatories (and even getting the bank paperwork circulated and executed to reduce this to a single signatory would be difficult) and as the other three signatories do not live in Edinburgh it has been much simpler during Covid for me to pay online from another of our associated companies, where I may be a sole signatory and then, once a quarter, post a cheque to one of my co-signatories to countersign in order to repay the inter company loan.

Not all such arrangements are sinister, some are merely practical.

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By LucyLui
26th Jul 2021 14:37

thanks everyone for all your answers.
feel a lot better knowing I'm not just being completely paranoid !

yes, this is a regular problem.
we have architects, solicitors, consultants engaging our services so we raise bills for them. But then we have third party companies paying money to us, with no references, etc. When asked the companies tend to just be confused and when you ask the architects, etc they just say "oh yeah I just gave your bill to my customer and asked them to pay it". Most of the time I don't know who has engaged their services, only that they have engaged ours.
It can get a bit messy to say the least.
Credit control can be quite a stressful event. LOL

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Replying to LucyLui:
A Putey FACA
By Arthur Putey
26th Jul 2021 15:02

You can take the money from anyone, but as others have suggested it might leave you in an odd position contractually. If you were ever to have to credit and refund a customer, who would you pay?

I would suggest that you require a remittance advice from the sender that clearly states the invoice number(s) and amount being paid before you allocate it to the invoice. Hold the money in an unidentified customer receipts account and keep chasing payment until you do, don't accept the customers word for it.

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Replying to LucyLui:
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By Hugo Fair
26th Jul 2021 17:55

Sorry to potentially raise your paranoia levels again, but I'm more worried since reading that "we have architects, solicitors, consultants engaging our services so we raise bills for them. But then we have third party companies paying money to us."

As I understand it this means that you're receiving money from people who (whilst many are no doubt innocent) are in the red flag area for money laundering ... although you've not carried out any checks on them (since you don't know who they are)! Presumably you are carrying out AML checks on your clients and hopefully they are doing so also on their clients, but you sound a bit exposed to me?

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Replying to Hugo Fair:
Maytuna
By DJKL
26th Jul 2021 21:11

Is the OP doing an activity covered by MLR? I am not sure they are say accountants as they more seem to be mere suppliers (though what they supply is not stated so whether MLR covers them is unknown).

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Replying to DJKL:
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By Hugo Fair
26th Jul 2021 21:29

Well spotted! I get so used to OPs being accountants (or at least claiming to be) that I completely forgot we hadn't established the nature of what OP is supplying.
Nevertheless, "architects, solicitors, consultants" are very much providing services usually covered by MLR - so I heard a warning bell when told their clients were cutting out a loop by paying OP direct.
But who knows what's going on - or why!

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