So our sales rep is arguing with me that we do not need to isse any sales invoices until the client has actually paid. In his opinion there is no obligation to issue the invoice until the customer had paid. However I argue that the invoice should be issued as soon as the customer is under obligation to pay. His response is that they then might choose not to pay, gives me some exapmles of when you only have to pay for something over the counter once you receive the goods (not really relevant as our company is in the services sector). I have tried the approach of when the emails are exchanged and the customer is happy with being supplied with the service but this does not cut it. I am afraid he is not very open minded and need some strong arguments here. Help!
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The sales rep is clearly an idiot. I wouldn't concern myself with his existence and carry on as normal.
The sales rep is clearly an idiot. I wouldn't concern myself with his existence and carry on as normal.
Harsh but fair.
[sigh]
Would the sales rep agree that the time of supply of a Mars bar over the counter at your local corner shop is very likely on the same day as you pay for it ?
Tell him to come up with more convincing. Dealing with services, perhaps. As opposed to goods.
Have a look at the tax point rules for services (not goods) for which I might find you a link when I've finished filing these forms at CoHo.
What does the contract with the customer say about payment terms?
And most businesses aren't going to pay anything without an invoice in their hand
Some businesses issue proforma invoices and then only supply once it has been paid (and then follow up with a formal VAT invoice)
But yes taking accounting advice from sales reps is always risky...
But yes taking accounting advice from sales reps is always risky...
Or any advice at all, really.
Usually see this when they have reached their target for the month and want the sales to count towards the next period.
If they are under target they will be begging you to invoice as soon as the customer has expressed a vague interest
WhichTyler wrote:
What does the contract with the customer say about payment terms?
And most businesses aren't going to pay anything without an invoice in their hand
Some businesses issue proforma invoices and then only supply once it has been paid (and then follow up with a formal VAT invoice)
But yes taking accounting advice from sales reps is always risky...
Well, the payment is on receipt. However some customers pay by instalments.
Payment is on receipt ? They pay, you receive ?
Or, if you mean payment is on receipt of invoice, there's your answer. If they don't receive an invoice, they've no obligation to pay.
I, as a customer, will not pay for anything without an invoice. Ergo I will never pay for your services.
I, as a customer, will not pay for anything without an invoice. Ergo I will never pay for your services.
So you would never buy anything from online? They might provide an order form but unlikely an invoice at checkout.
Let me think this over . . .
* Client will not pay unless there is an invoice
* You will not issue an invoice before client has paid
Isn't there is real danger you will run out of money?
The only good to come out of it is the sales rep makes himself redundant.
There's actually nothing to stop you issuing an invoice for goods/services which have not yet been delivered. Whether or not the customer will pay it is another matter, but that's not the question here. I agree with everyone else - the sales rep's view is utter rubbish and is almost certainly related to how his personal targets are structured.
But given you appear to now invoice before the service itself has been supplied to the customer (work done) do remember you will need to adjust for this at period ends within the accounts.
I tend to only invoice once work is complete, I certainly do not often pay for services before services have been provided, invoice or no invoice.
Surely it depends on the contract and service provided. Phone companies and insurance you are invoiced and pay in advance of the full service provided.
It is common in lots of industries. It very useful for cashflow purposes to be able to get your money up front.
For prolonged service maybe, however even with phones they tend to be line rentals in advance/calls arrears.
Re insurance I would never pay a full year in advance where there was a significant premium after the scare we had when Independent turned turtle way back in the depths of time. I was so thankful I had set up to pay via Premium Credit/ similar otherwise we could have dropped about £30k. As it was we merely cancelled the monthly payments and sorted insurance with A N Other and told the liquidator to go whistle.
Does sound rather as though the sales rep is trying to manipulate figures somewhat. We get it sometimes by reps who are much more creative and credible than this guy. They don't usually last long...
Since when do sales people get involved with accounting decisions. Especially based on legal principles.
Maybe suggest you pay his commission after the YE accounts have been signed. That will shut him up. Idiot!
Well if I were the customer, I wouldn't pay without an invoice.
None of my customers would pay me without an invoice.
Also, VAT tax point, when the work is done/goods delivered/whatever. Invoice is needed.