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Can Company A pay on behalf of another company?

Company A pay to Company C account on behalf of company B s invoice .

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Hi Please help. Company A is main contractor, subcontracting their work to Company B. Company B invoice to Company A and it gets paid but now comoany B have a bank account problem. Untill that is sorted.  Is it legal for company A to pay into Another company account on behalf of company B. Company B send invoice with another company bank details on their invoice and ask company A to pay into that account with company B payment reference and how will company A puts these payments in their accounts ?

Thank you 

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By Accountant A
05th Nov 2019 17:15

I'll start. No, don't do it.

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By paul.benny
05th Nov 2019 17:28

Agree with Accountant A.

What's this 'bank account problem' that supposedly has? If it's something dodgy and company B doesn't actually receive the money, you'll still be liable.

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Replying to paul.benny:
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By Mani bridge
05th Nov 2019 17:34

Hi Paul and accountant A. Thank you for your swift reply.

Comoany has temporary blocked on their bank account from bank and to continue their payroll they send new account details to keep receiving their invoice payment and mentioned on invoice too.they want comoany A to pay into these new account details until their account back to normal. They mentioned on phone and alsonon their comoany letterhead these new details..
Please advise if okay to pay them in these new details because this will effect the work placement.. people won't get their wages on time and whole contract will affect.. thank you

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Replying to Mani bridge:
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By paul.benny
05th Nov 2019 17:43

I'm reassured by this being a formal request from the company, but I'm still a uncomfortable:
Who does this other account belong to?
And why is their account blocked? Whilst I sympathise with the plight of the workers, company B should be working with their bank to resolve it, not having to rely on some flaky work-around.

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Replying to paul.benny:
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By Mani bridge
05th Nov 2019 17:58

This another company is comoany B s sister company..bank has asked for some proof of payments they received in their account which are genuine and all the proofs have been submitted to bank.they are now waiting for bank to come back to them.bank said it can take up to 2 working weeks. This was a for so request comes from comoany email and we have confirmed over the phone that this email is genuine.

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Replying to Mani bridge:
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By paul.benny
05th Nov 2019 19:36

This sounds like you're dealing with companies outside the UK and probably outside EU. Russia? And is the second company is in a different country?

It might be genuine or it might be cover for something unlawful. I wouldn't do it. Only pay to an account owned by your supplier in their own country.

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Replying to paul.benny:
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By Mani bridge
05th Nov 2019 20:15

Hi Paul.yhank you for your reply . Second company is in UK and our supplier has send us all the documents for company I.e. director identification documents, company documents act to verify company before making any payment...all I am asking is that is it genuine to make payment to another comoany in behalf of another entity? Has anyone done this before?
Thanks

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By JoF
05th Nov 2019 17:51

On the face of it sounds dodgy as hell.

Is it a genuine request?

Why have the bank blocked their account?

Agree with the others. Do it and it will likely come back to bite.

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Replying to JoF:
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By Mani bridge
05th Nov 2019 18:01

Hi Jo.
This request comes in from company B email but to be sure we have called and confirmed over the phone too.this is a very genuine request.
Bank has asked for some proof of payments. Which have been. Submitted to bank and it can take up to 14 working days to resolve the issue. Just to keep the working capital and tonoay workers on time this company asked us to do this

Thank you.

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By Accountant A
05th Nov 2019 17:54

Mani bridge wrote:

Is it legal for company A to pay into Another company account on behalf of company B.  

Whether it's legal or not, I doubt very much it complies with the terms and conditions under which "Another company" is provided with banking services by its bank.

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By ireallyshouldknowthisbut
05th Nov 2019 18:03

Perhaps you should speak to your company accountant?

I dont think they will be too impressed if you did this without asking first.

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Replying to ireallyshouldknowthisbut:
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By Mani bridge
05th Nov 2019 18:05

Thank you I will confirm with the accountant but firstly I wanted to get a wide scenario if this ever happened or if anyone has done this before.

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Psycho
By Wilson Philips
05th Nov 2019 21:04

What a suspicious lot here.

Provided that it’s properly documented there’s nothing in law to prevent B from assigning the debt to any other party of its choosing, especially if done for full consideration.

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Replying to Wilson Philips:
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By Accountant A
05th Nov 2019 21:45

Wilson Philips wrote:

Provided that it’s properly documented ....

And when did that ever happen in an Any Answers question??

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Replying to Accountant A:
Psycho
By Wilson Philips
05th Nov 2019 22:03

Well, perhaps it might happen as a result of the answer(s). After all, is that not one of the purposes of Any Answers? Of course, if the deed has already been done... (which, reading the entire thread, looks like it has)

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Replying to Wilson Philips:
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By Mani bridge
05th Nov 2019 22:25

Thank you so much everyone..I will get this on comoany B s letterhead and signed by director. And this will make the workers life easy and they wilk start getting paid. Thanks

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Replying to Wilson Philips:
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By JoF
06th Nov 2019 07:51

But that will not work if the bank have a debenture/ security over said debt will it?

Would it just work on the basis of a letter,signed by a director?

Getting into legal territory now I would've thought, so th OP shouldn't be relying on this as an answer.

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Replying to JoF:
Psycho
By Wilson Philips
06th Nov 2019 09:03

No of course it wouldn’t work on the back of a director’s letter - proper legal process has to be followed. And yes, any form of security over the asset would likely cause problems.

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By Tax Dragon
06th Nov 2019 06:25

I used to work with someone like this. Maybe we all have. Don't like the first answer? Keep asking around until someone gives the answer you want.

On this occasion, I'm not quite sure what the point of asking at all was, since it's obvious the payments would be made irrespective of any response.

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Replying to Tax Dragon:
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By Mani bridge
06th Nov 2019 06:42

Good Morning Tax Haven. Point of asking was that I want to know if anyone has done this before and as you guys have more experience than me. All I want to know is if it is doable.
Thanks

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Replying to Mani bridge:
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By Tax Dragon
06th Nov 2019 08:55

I'm not sure what "it is doable" means, but anyway what will happen if everyone here says "no, it's not doable"?

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Replying to Tax Dragon:
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By Mani bridge
06th Nov 2019 11:59

Hi I meant tax dragon..lol..auto correction ...
Thank you guys for your response.

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Replying to Mani bridge:
By JCresswellTax
06th Nov 2019 10:21

Tax Haven lol

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By kestrepo
06th Nov 2019 15:04

I'll start off by saying that if it doesn't sound right it probably isn't - this has been echoed in many of the other posts so far......

I would recommend you refresh your knowledge of Anti Money Laundering, Anti Bribery and Corruption and Modern Slavery Legislation before moving much further forward...........

It is however doable and is not as unusual as you might think........

One way this could be done would be for company B and C to have a Factoring agreement between each other. This would mean that company C could collect the monies due to company B in much the same way that a debt collection agent can process payments from their clients customers.

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By John R
06th Nov 2019 15:54

My advice would be "Speak to a commercial lawyer as this is not within the expertise of an accountant".

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