Paying suppliers on behalf of client - insurance

Paying suppliers on behalf of client - insurance

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Paying suppliers on behalf of client.

I asked this question a few years ago when the consensus was not to do it unless it was an employed role but I wondered if things have moved on.

A prospect has asked about this and indicated that the previous two accountants (one a high street firm and the other a sole practitioner) were on the bank mandate and had no issue with this. 

Are others providing this service and, if so, can anyone recommend an insurance company that covers this alongside standard PI?

We would be using Xero. Can anyone recommend authoristaion procedures via Xero or apps for this?

Thanks in advance.

Replies (26)

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RLI
By lionofludesch
29th Jul 2022 10:26

It wouldn't be for me.

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Replying to lionofludesch:
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By David Ex
29th Jul 2022 10:39

lionofludesch wrote:

It wouldn't be for me.

The OP is keen to do it:

https://www.accountingweb.co.uk/any-answers/client-bookkeeping-asked-to-...

“ By CWservices6064
04th Sep 2020 14:51
It seems that this is good with my PI insurance with an individual payment limit of £15k for a single transfer requiring sole authorisation.”

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Replying to David Ex:
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By Hugo Fair
29th Jul 2022 11:18

Maybe ... but WHY is OP keen to do it?

Leaving aside my wholehearted agreement with Lion's answer (for which there are many reasons - not just PII), there are obvious risks ... so what are the benefits (for OP)?
It feels like asking whether I would like to do lots of additional work for free.
Or if the client is prepared to pay for OP's time & additional cost plus a margin, then one has to wonder what's in it for client?

If OP is prepared to go that far, why not go the full hog and offer a BACS Bureau service (clue: it's expensive & arduous & not very profitable)?

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Replying to Hugo Fair:
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By David Ex
29th Jul 2022 11:51

Hugo Fair wrote:

Maybe ... but WHY is OP keen to do it?

Didn’t read it but suspect the answer lies in the 2020 thread I posted.

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Replying to Hugo Fair:
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By Elgin
29th Jul 2022 12:21

It would be part of overall work at a decent rate.

The client see's their time as much more valuable than the rate they would be paying and, like many, simply has no interest in dealing with online banking.

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Replying to David Ex:
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By Elgin
29th Jul 2022 12:03

Not so keen:

By CWservices6064
09th Sep 2020 15:10
I thought it was worth an update on this as I have at last got an opinion from my insurers (Hiscox) underwriters.

I was initially told by the call handlers that it should be fine up to the stated £15k per transaction, the underwriter has confirmed that this limit relates to our own business bank accounts.

We are NOT insured in relation to making payments from a third parties bank account even if we are on the bank mandate and have directors express authority for individual payments.

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Replying to Elgin:
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By Tax Dragon
29th Jul 2022 13:25

CWservices6064 wrote:

Not so keen...

So why do you sound so much like you want to do it?

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Replying to Tax Dragon:
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By Elgin
29th Jul 2022 13:27

................It's nothing sinister.................

Just wondering if it can be done.

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Replying to Elgin:
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By Tax Dragon
29th Jul 2022 13:31

So ask your insurers.

Again.

(Clearly no-one responding has investigated this with theirs, because they have no interest in it.)

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Replying to Tax Dragon:
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By Elgin
29th Jul 2022 13:27

................It's nothing sinister.................

Just wondering if it can be done.

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Replying to Elgin:
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By Tax Dragon
29th Jul 2022 13:32

CWservices6064 wrote:

................It's nothing sinister.................

Interesting response, btw.

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Replying to Tax Dragon:
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By Elgin
29th Jul 2022 14:21

Thankyou.

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Replying to lionofludesch:
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By Paul Crowley
29th Jul 2022 11:26

Nor me

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Slim
By Slim
29th Jul 2022 11:30

Reward small
Risk high

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Replying to Slim:
RLI
By lionofludesch
29th Jul 2022 11:45

Slim wrote:

Reward small
Risk high

Too right.

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By Elgin
29th Jul 2022 12:15

For a single director company with no other employees:

I do see the risks here, but are they legally any greater than an external bookkeeper maintaining records on say Xero, and providing a client with a list of suppliers due for payment and the bank details for the client to action via the bank?

If the information provided by the bookkeeper is incorrect wouldn't the liability be the same whoever actioned the payment assuming both are on the mandate?

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Replying to Elgin:
RLI
By lionofludesch
29th Jul 2022 12:35

CWservices6064 wrote:

For a single director company with no other employees:

I do see the risks here, but are they legally any greater than an external bookkeeper maintaining records on say Xero, and providing a client with a list of suppliers due for payment and the bank details for the client to action via the bank?

If the information provided by the bookkeeper is incorrect wouldn't the liability be the same whoever actioned the payment assuming both are on the mandate?

Yes - because in the external bookkeeper example, the business owner has an opportunity to review and override the bookkeeper.

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Replying to lionofludesch:
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By Elgin
29th Jul 2022 13:13

I'm not suggesting that payments would be made without proper recorded authorisation of the director.

Purchase invoices would have director approval on Xero and payment runs, including supplier bank details, would be signed off by the director prior to a bookkeeper uploading or entering data into the online banking platform.

So a couple of opportunities for director override.

It reminds me of when cheques were presented to directors to sign off which must now equate to pressing go on a list of online bank payments uploaded by someone else.

I'm not saying that there is no risk but I'm wondering how external accountants may be using things like ApprovalMax etc. to offer this service as part of outsourced accounting functions.

Seems clear that Aweb consensus is still to leave well alone and I value that opinion.

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Replying to Elgin:
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By Hugo Fair
29th Jul 2022 12:41

"I do see the risks here, but are they legally any greater than an external bookkeeper maintaining records on say Xero, and providing a client with a list of suppliers due for payment and the bank details for the client to action via the bank?"

Of course they are (greater).
Who is issuing the order to the bank to transact?
That is a contractual matter as opposed to a 'mere' advisory one (which as Lion points out still leaves the principal responsible for issuing the transaction order).

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Replying to Hugo Fair:
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By Elgin
29th Jul 2022 13:18

So, if the bookkeeper is on the bank mandate with a nil or £1 payment limit, they could prepare 'draft' purchase ledger payments based on creditors approved for payment by a director for the director to log in and click a final send after review?

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Replying to Elgin:
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By Hugo Fair
29th Jul 2022 13:34

You seem to be unwilling/unable to distinguish between 'could', 'should' and 'would'.

Everything you seem to have suggested, including this latest 'scheme', is a 'could' ... i.e. it is an an action physically capable of being performed.
But I'm with every other poster on here in saying that you 'should' NOT do so - and I 'would' NOT do so.

There has to be something going on here of which at least one of us is unaware ... so I'm out.

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Replying to Hugo Fair:
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By Elgin
29th Jul 2022 13:51

You are obviously far cleverer than I and I appreciate your time.

I'm really interested to know why this service arouses such suspicion?

To be honest, all of our client's are small businesses and I would think that 80% would rather pay us to perform this function than spend time doing it themselves.

What is it that you think could be going on?

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Replying to Elgin:
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By tom123
30th Jul 2022 17:14

It's more the Issue if something goes wrong.

I've always worked in house, and of course raised payments for hundreds of k.

The difference is, as an employee, I'm not personally on the hook if money goes astray

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Replying to tom123:
paddle steamer
By DJKL
01st Aug 2022 11:20

It is so easy to make a mistake.

I had Jan tax payments to make for my owners and their wives .

I had everything written down on a piece of paper , husband's tax , wife's tax, total tax for that family. Catch is when I paid wife's I read the total for family not hers and paid over £30k too much. Luckily I did it before I did the husbands. It took months to get HMRC to transfer to correct account, hours of work, but at least I had not in total overpaid anyone.

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By williams lester accountants
30th Jul 2022 17:26

Try this instead of being on a bank mandate - https://www.modulrfinance.com/.

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Replying to williams lester accountants:
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By Elgin
30th Jul 2022 23:32

Thanks, looks exactly what I am looking for.

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