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Pro forma invoices. How, what & why?
Hi all.
I have a customer that is terrible at paying. HM armed forces is the culprit, often being months before they cough up. Their excuse is that the guy who writes the cheques is in Iraq & they can only pay when he returns. 🙄 When I asked what would happen if he were not to return, they didn’t know.
So, rather than tell them to eff off (it’s good easy money) I want them to pay up before I start the work. Is the pro forma invoice the way forward, & if so, how do I go about issuing them with one.
All help appreciated.
Cheers,
Gwaredd.
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7 Replies
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We invoice most our clients 100% up front before we even start working.
We quote them. They say ok. We invoice they pay.
Our supplier does a pro forma invoice.
It’s purely an accounting thing. Once you issue a pro forma invoice its actually a liability once the client pays you. You’ve taken their money and you owe them now. Once you complete the work you create an invoice which offsets the liability and is now a revenue.
Double entry accounting my dear watson.
It also lets you to determine what work has been paid but not completed. You query the account you attach to the pro forma entries.
Your revenue is work you’ve actually completed.
Never set it up in an accounting package.
I know my supplier who uses it keeps the invoice number the same but puts .1 on the invoice after the invoice number.
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we deal with the armed forces, recently our admin staff recognized the Post office code being given was for Iraq as she used to work in the admin for forces. She made sure that payments were sorted before item was taken away.
It is hard work dealing with them.
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Do you guys get to wrap tanks?
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that would be fun!
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It all depends on how you pay your VAT, I dont know the ins and outs exactly of the accounting system, but if you issue a pro-forma you are not liable to pay the vat until it has been paid and a full invoice issued.
So you could issue a pro-forma in February for work to be done in March and your vat would not be due until the end of march. If you issue an invoice in February for work to be done in March then the VAT is due at the end of February.
This is common throughout the building industry, you are not allowed to issue an invoice to them until they have paid you. You have to send them a ‘notification of payment’, they pay you then you send your invoice for the payment. Its all about delaying the VAT payment.
Clear as mud..!! -
quote Steele Signs:Hi all.I have a customer that is terrible at paying. HM armed forces is the culprit, often being months before they cough up. Their excuse is that the guy who writes the cheques is in Iraq & they can only pay when he returns. 🙄 When I asked what would happen if he were not to return, they didn’t know.
So, rather than tell them to eff off (it’s good easy money) I want them to pay up before I start the work. Is the pro forma invoice the way forward, & if so, how do I go about issuing them with one.
All help appreciated.
Cheers,
Gwaredd.
Gwaredd,
H.M.Forces Procurement Office DOES NOT go abroad, they are civil servants not members of the Armed Forces, Most of them live in a billion pound glass heaven in Filton, Bristol, called Abbeywood.
If you have a contract with HM you will have an agreed payment turnaround time…(probably 60 days)The guy you are contacting in the UK is probably the guy who types the cheques that then go to the department signatory for signing.
If your dealing directly with a Battalion, then the Battalion Commanders Office in the UK are the people to ask for your money, as an individual commits a military discipline offence for not paying and bringing the battalion rep into disrepute
Payment before delivery might chase off a few customers so its a tricky situation. It really depends on who you are really selling to.
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quote Steele Signs:Hi all.
Their excuse is that the guy who writes the cheques is in Iraq & they can only pay when he returns. 🙄
I must remember that one:)
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