Share this content

Principal, agent, customer invoicing

How should the invoicing work in a principal, agent, customer transaction

Didn't find your answer?

Friend has set up a website, through which jewellers can sell their jewellery. My friend's company (X Ltd) acts as an agent to facilitate the sales of the jewellery and charges commission, subject to VAT, for acting as the agent.

How should the invoicing work in this transaction? X Ltd has just had its first sales and it's being queried with the jeweller. Should:

1) The jeweller raise an invoice in their system for the full amount and X Ltd raise an invoice to the jeweller for agency services (if so, who does the jeweller invoice?), or;

2) X Ltd raise an invoice to the customer. The jeweller raise an invoice to X Ltd for the full amount. X Ltd raise an invoice to jeweller for the commission (in this case charging VAT to the customer could be logistically tricky as some jewellers won't be registered for VAT), or;

3) Another method (just a little confused as to how the end customer should be invoiced)

I work in industry where the invoicing is much more straightforward so any assistance would be really appreciated!

Replies (2)

Please login or register to join the discussion.

By Tim Vane
16th Jan 2019 22:51

These are the recommended steps:

1. X Ltd appoints accountant
2. Accountant issues engagement letter
3. Accountant advises X Ltd
4. X Ltd follows accountants advice
5. Accountant invoices X Ltd

Thanks (1)
By Accountant A
16th Jan 2019 23:10

If you are an accountant who is not working in practice, the best advice you can give a friend is (as Tim Vane suggests) to get an accountant ASAP.

In the circumstances outlined, the details are likely to be critical. I'm not sure how long your friendship will last if you relay some garbage from internet randoms as advice on which he/she should act and then it all turns out wrong. It might even rebound on you in terms of your professional body.

You simply say to your friend: "I would love to help but this is not an area I am competent, qualified or insured to advise you adequately on. I wouldn't want to give you bad advice which could cost you dear". That's what a real friend would do.

Thanks (0)
Share this content

Related posts