I am carrying out bookkeeping for a small food producer who is currently issuing many low value proforma invoices (100 per month) using Excel. Once these are paid they send the goods out. Because they are not VAT registered they are not issuing a VAT invoice when the proforma is paid.
I have been picking up the payments from the bank statements and posting these directly to sales as this seems the most straightforward way to get a sales figure into the accounts. However, I'm not sure this is the right way to go about things.
Any advice on the right way to handle this situation appreciated.
Replies (9)
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You're probably right.
The only issue would be identifying the pro-formas that weren't fulfilled. If any.
Or - you could just work on money received. He won't have any debtors because the goods aren't sent out until payment's made.
I think your client is making life difficult for themselves by sending out proforma invoices. They're in effect quotations.
What they are doing will soon become unmanageable if volume increases, and especially once they have to be VAT registered
Agree - it's fine at the moment but the client will need to rethink his plan if he becomes VAT registered.
It could lead to a lot of unnecessary paperwork.
Cash is king
Agree not real invoices until paid.
Do not see VAT being a real problem as paid before supplied
It's not the tax itself.
It's the paperwork.
Those pro formas will need to be replaced by tax invoices.
I agree but I would suggest fairly simple invoices that could just refer to the original by number/ref but be a competely new set in pretty much payment order
I agree but I would suggest fairly simple invoices that could just refer to the original by number/ref but be a competely new set in pretty much payment order
Sure, but it's still a faff they probably don't need.
For me, pro formas for small sums are a waste of time. You can get the money back in six months anyway.
Obviously they have a use if you're invoicing £10000 a time to some iffy company.
can not help but wonder what the sales order cycle is like.
issuing an excel proforma itself is time-consuming...100 a month ?
indeed ,is a good customer address list/ database maintained to populate excel invoice
is it a b to b enterprise or b to c , or a mix
why not take order and settlement monies at the same time and supply/ ship produce?
why is this, apparently, not possible?
perhaps it is worth investigating the above.
fact that a proforma sales invoice is seen as a solution, makes me question the fundamentals.
I dunno, frank. But, clearly, the goods are paid for before they're supplied.
So why not issue a proper invoice, send the goods if they pay? If they don't pay, send a credit note before the VAT quarter end.
Saves the problem of this duplication of issuing pro formas and proper VAT invoices.