Invoice on order

Invoice on order

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We are a manufacturing company and it can take many weeks between time of order and despatch of goods.

Are there any practicalities of invoicing 100% on receipt of order rather than at time of delivery.

Any thoughts greatly appreciated.

Regards

Richard Jones

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By tom123
12th Jan 2005 10:15

Yes
From a statutory accounting point of view, you would have to reverse all invoices raised prior to the year end which had not resulted in sales.

VAT on Sales will fall due in an earlier month than it should be, resulting in earlier payment of vat.

Your aged debtors will be meaningless, as customers will not pay invoices until after they have had goods, therefore difficult to chase debts effectively.

You will have more credit notes, as order amendments will result in new invoices being required.

My advice, try to avoid this if at all possible. I have worked somewhere where this was done, and it was an unneccesary nightmare.

Why not see if you can use some type of sales order processing instead, it is even on Line50

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By dclark
12th Jan 2005 19:40

Some ideas
Richard

Two main items to think of……1) the money……2) the paperwork and VAT

1) the money
I think there is a confusion over producing a ProForma Invoice to enable you to get money up front and the movement of Goods (Order > Despatch > Invoice). If the business process is to get paid before delivery then you probably need a ProForma process. This is not an invoice and should say so. Aged debts reports should be able to be run on Due Date and Posted Date (at least) so issues of odd looking debts are taken away. In this example you would have posted the cash to the customer but not posted the sales invoice as it does not exist yet. If your solution allows you to ignore these unallocated cash items…..

2) the paperwork and VAT
If you system is reasonable you should be able to produce a ProForma Invoice from a Quote or Sales Order. This is not a VAT document and normally says so. Please don’t take my advice on VAT, as I’m not a VAT practitioner (there are excellent ones on this site) but if you supply goods, the taxpoint for accounting for VAT is the sooner of the raising of a tax invoice or the receipt of payment. You can delay this taxpoint, by raising a "Proforma Invoice" instead of a valid tax invoice, which will only now be issued when payment is received, or 14 days after delivery, if sooner (I think I cut’n’paste that correctly !). To be fair I’ve seen VAT treatments far longer than that, but the company was consistent and C&E were happy

If you want to talk off line, please get in touch

Kind Regards

Daniel Clark
Ryba Macaulay Ltd
[email protected]

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