Early/Advance Payment

[DotNetDeveloper]

Here is something to ponder.

I am sure some of you have had prompt paying clients at sometime in your contracting careers, but have you ever had advanced paying clients?

For example, not always, but fairly often we will be asked to produce our invoices before the end of the month. So today I have only worked 3 weeks into this month, however I have to produce an invoice that includes working for the next 7 working days, (assuming I will turn up for those days).

Obviously this is great for me, my cashflow and interest gained. However, it does make my accounts look a little strange and it makes me wonder if it looks like a permie position to hector.

What are peoples thoughts on this? Discuss.

[northernladuk]

Here is something to ponder.

I am sure some of you have had prompt paying clients at sometime in your contracting careers, but have you ever had advanced paying clients?

For example, not always, but fairly often we will be asked to produce our invoices before the end of the month. So today I have only worked 3 weeks into this month, however I have to produce an invoice that includes working for the next 7 working days, (assuming I will turn up for those days).

Obviously this is great for me, my cashflow and interest gained. However, it does make my accounts look a little strange and it makes me wonder if it looks like a permie position to hector.

What are peoples thoughts on this? Discuss.

Are you confusing something here? You are invoicing them early that is fine. What has that got to do with paying you early? You won't get paid before you have worked those days and then there is a payment days after that? This doesn't make sense. You can invoice in advance, no problems here, often time systems allow you to book in advance. Tell us more about you getting paid though as you miss this completely.

Even though I think you are confusing something here I am sure the answer regarding the IR35 thing will be the same. Permies don't invoice clients so how can it make you look like a permie? Clear your situation up so we can answer.

[dynamicsaxcontractor]

Here is something to ponder.

I am sure some of you have had prompt paying clients at sometime in your contracting careers, but have you ever had advanced paying clients?

For example, not always, but fairly often we will be asked to produce our invoices before the end of the month. So today I have only worked 3 weeks into this month, however I have to produce an invoice that includes working for the next 7 working days, (assuming I will turn up for those days).

Obviously this is great for me, my cashflow and interest gained. However, it does make my accounts look a little strange and it makes me wonder if it looks like a permie position to hector.

What are peoples thoughts on this? Discuss.

I assume that if you wouldn't work 1 or 2 days you would refund them, or deduct them on next months invoice? If so, nothing strange.... just a good deal for you.

[northernladuk]

I assume that if you wouldn't work 1 or 2 days you would refund them, or deduct them on next months invoice? If so, nothing strange.... just a good deal for you.

But he hasn't mentioned them paying him any earlier. Just invoicing them a little before month end so they can close down the month as close to end as they can. Are they still sticking to the 7 days or whatever you have and are actually getting paid on the 2nd instead of the 7th? Are they taking the date of invoice as starting the clock or month end?

[dynamicsaxcontractor]

But he hasn't mentioned them paying him any earlier. Just invoicing them a little before month end so they can close down the month as close to end as they can. Are they still sticking to the 7 days or whatever you have and are actually getting paid on the 2nd instead of the 7th? Are they taking the date of invoice as starting the clock or month end?

You are right, I misread.... What I mean, if he doesn't work he will need to send a credit note, or deduct days next month, or whatever they want him to do. As you say, he might still have to wait until Christmas for payment.....

[northernladuk]

You are right, I misread.... What I mean, if he doesn't work he will need to send a credit note, or deduct days next month, or whatever they want him to do. As you say, he might still have to wait until Christmas for payment.....

Yeah your right. I am just a bit bemused by the whole post. If his grasp on IR35 is as tenuous as his question suggests then I wonder if he really has mis-understood how his invoicing/payment cycle works but can't tell as the post doesn't really make sense. Billing a client making you look like a permie? How does that work

[Spacecadet]

Yeah your right. I am just a bit bemused by the whole post. If his grasp on IR35 is as tenuous as his question suggests then I wonder if he really has mis-understood how his invoicing/payment cycle works but can't tell as the post doesn't really make sense. Billing a client making you look like a permie? How does that work

<deep breath>
I think the implication is that if he's invoicing for an entire month mid way through the actual month he's invoicing for then there is an implication that he will be remaining at the client for those billed but as yet unworked days regardless of the clients actual requirements for which he has been contracted.

Simply put, since he is invoicing and being paid ahead of the work actually being done then the client could be said to be duty bound to provide work/employment.

[ASB]

<deep breath>
I think the implication is that if he's invoicing for an entire month mid way through the actual month he's invoicing for then there is an implication that he will be remaining at the client for those billed but as yet unworked days regardless of the clients actual requirements for which he has been contracted.

Simply put, since he is invoicing and being paid ahead of the work actually being done then the client could be said to be duty bound to provide work/employment.

I can see that view (I don't agree with it but I can see it). Two possible workarounds might be:-

- Issue the invoice - after all it is only trying to comply with the clients internal procedures. Subsequently issue a credit not if it becomes appropriate. There is no question of the client becoming obliged to pay for work not done.

- Issue a pro-forma invoice. These are commonly used where the invoice is effectively in the form of a quote (and goods will not be dispatched or service provided until paid). If the client will accept (and pay against) a pro forma then an actual invoice is produced at the point the actuals are in fact known.

[DotNetDeveloper]

Sorry for the misunderstanding. I invoice for the work for the entire month, I am paid prior to actually completing a months worth of work (by about a week).

My point of IR35 is not the billing of a client via invoice, dont be silly, but the fact that I receive payment before on or on the month's end, just as a permie would on PAYE. There is little incentive for the client to pay up early so it just seems strange so I thought I would gauge other peoples thoughts on this.

I am not knocking it though, it is a great client and I appreciate the money upfront.

[Spacecadet]

you could miss a months billing and the month after starting billing for the previous month.