Invoicing customers

bizman

Registered User
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18
All our customers are outside the EU.

They all pay automatically after certain thresholds have been met, for accounting purposes is it OK to raise invoices on the day the payment has been received?

Sometimes we don't even notice when a payment has been sent, they do not require us to invoice them for payment at all.
 
Normally you must prepare your accounts on an accruals basis. Thay would mean dating the invoices the date you provide the goods or services.

There is such a thing as a cash basis of accounting, but you must meet the Revenues requirements to do this, basically less than a certain size. You must record your costs on the same basis, you cannot have income on a cash basis and costs on an accruals basis.

There are details on the Revenue website.
 
Hi Bizman, important to get this thing right.

I've seen a large subsidiary where because customers delayed in paying were only invoiced on receipt of payment, yet their VAT (not called VAT in that overseas country) was calculated on pro-forma invoices. Debtor days looked okay too ... .... until you looked hard deep inside the bonnet.
 
Hi bizman

What is the primary purpose of accounting?

It is to measure how your business is doing. Whether you are making profits or losses.

It is to measure the assets and liabilities of your business.

If you want proper management information, you should raise invoices when the services or goods are dispatched. Otherwise, you will have a very poor idea of how you are doing.

Work out the tax treatment afterwards.

Brendan
 
Hi Brendan, right now I'm honestly just looking for the way I should be doing it from a legal compliance perspective, i.e. on what day I raise invoices.

My customers auto-pay me when certain thresholds are met so there's a bit of leeway by a day or 2 about when I could raise an invoice (only for records sake, they don't want it), so I'm just wondering when they say they've dispatched a payment for me do I just raise an invoice against that amount in my accounting software on that day.
 
Hi. Your invoices are not related to cash-received. Bad idea. Issue invoices on the basis of agreements for goods or services supplied.
 
Doesn't matter how they pay as long as you get your invoices issued correctly. Eveery week/month, send them a statement to reconcile issued invices against payments received.
 
Hi biz

I have seen businesses where the invoicing was sloppy and as a result, they lost out on income.

How do your clients know what to pay you if you don't issue invoices?

It seems that they decide what to pay you? That is odd.

But as long as you make sure you have some time sheet system or dispatch system which controls your income, then that is ok.

At some stage, you may well have a Revenue Audit. They might well be suspicious of a system that does not have invoicing based on services provided.

For example. If you sold €10,000 worth of goods in December and did not include that in your calculation of profits, I would say that Revenue would regard it as incorrect. It would depend on the scale of it. But if it were material, you could find yourself in trouble.

Brendan
 
How do your clients know what to pay you if you don't issue invoices?

It seems that they decide what to pay you? That is odd.

But as long as you make sure you have some time sheet system or dispatch system which controls your income, then that is ok.

At some stage, you may well have a Revenue Audit. They might well be suspicious of a system that does not have invoicing based on services provided.

They pay out automatically based on thresholds, for example once I hit 2000 they will pay out automatically, so if I do 3000 Monday-Sunday last week they pay me on automatically into my account on Monday this week, they don't require an invoice.

When would I raise an invoice in this case?
 
Hmmmm.... your customer sounds like an internet giant who are self-accounting. Likely you have agreed to this in the T&Cs you have signed. Nevertheless, you are required to have invoices. I think you should produce invoices that, in essence go nowhere as you say your customer does not require them, but which you should retain yourself and use for your accounting.

You may also have VAT considerations depending on jurisdiction of your customer.

All the above assuming it is an internet enterprise.... is it?
 
Hmmmm.... your customer sounds like an internet giant who are self-accounting. Likely you have agreed to this in the T&Cs you have signed. Nevertheless, you are required to have invoices. I think you should produce invoices that, in essence go nowhere as you say your customer does not require them, but which you should retain yourself and use for your accounting.

You may also have VAT considerations depending on jurisdiction of your customer.

All the above assuming it is an internet enterprise.... is it?

Yes you are correct, the jurisdiction are US/Canada.

For example the period:

23/9/2019 - 29/9/2019 $5,000, invoice raised 2/10/2019, payment due today (Which will arrive say 3 days later)

Is this invoice date acceptable or would it have to be 29/9?
 
I think you are getting some off the point advice here.

I'm registered for VAT on the monies received basis, I also record all purchase invoices on the day their paid as they're all paid up front.

If you are registered for VAT on the monies received basis, you MUST invoice the goods the day you receive payment.

For example the period:

23/9/2019 - 29/9/2019 $5,000, invoice raised 2/10/2019, payment due today (Which will arrive say 3 days later)

Is this invoice date acceptable or would it have to be 29/9?

Your invoice should be dated 5/10/2019 if that is the day you receive payment.

Brendans makes a very good point in post no. 7, however I don't think he addresses your concern.

Hi Brendan, right now I'm honestly just looking for the way I should be doing it from a legal compliance perspective, i.e. on what day I raise invoices.


For example. If you sold €10,000 worth of goods in December and did not include that in your calculation of profits, I would say that Revenue would regard it as incorrect. It would depend on the scale of it. But if it were material, you could find yourself in trouble.

As you are registered with Revenue on the monies received basis you would not include this €10,000 in your accounts until you received payment, to do otherwise would be wrong.

If you are also paying your costs up front then there is an unrealised profit which is not recorded in your accounts, and form an accounting standards point of view you should adjust for that, and for proper management accounts you could adjust for that, but for Revenue purposes you cannot adjust for it.
 
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