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Previously on "Client has double paid an invoice"

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  • Craig@Clarity
    replied
    Originally posted by Abbot View Post

    The overpayment would just be applied as a payment on account against the client’s receivables account. There is no VAT implications of an overpayment by a client.
    Go careful here. If it's an overpayment then it should sit in other creditors and refunded to the client. No VAT implications.

    If it's a payment on account sat in the client's receivable account (payment in advance of supply of services with no VAT invoice issued yet) then the tax point is the date the payment was received and there IS VAT implications.

    Two different treatments, albeit maybe "subtle", but has potential VAT implications.

    Leave a comment:


  • Abbot
    replied
    Originally posted by Lance View Post

    that doesn't work I don't think.
    If you raise an invoice for £10k and apply a credit for say £5k against it they owe only £5k against that invoice so that's all they'll pay. Which is sort of OK but doesn't factor in the overpayment. There will still be some money that shouldn't exist.

    2 choices here. Repay it, or don't repay it. But if you don't repay it it needs to be accounted for correctly. And an overpayment isn't so easy to account for correctly. As Craig@clarity suggested (the qualified accountant), make it income and pay VAT on it.
    The overpayment would just be applied as a payment on account against the client’s receivables account. There is no VAT implications of an overpayment by a client.

    The easiest thing to do is ask the client what they want to do. If they haven’t replied by the next invoice date, issue a supplier statement with the next invoice stating the opening balance as the overpayment and the opening balance being applied to the current invoice. This will leave either a zero balance or a debit or credit on the account and they will be aware of this. This will demonstrate that the debit you have in your receivables is current and cleared at each invoicing cycle.



    Last edited by Abbot; 30 April 2022, 08:54.

    Leave a comment:


  • Lance
    replied
    Originally posted by d000hg View Post

    So you send an email saying you will apply a credit against future invoice(s) unless they contact you how they wish the money to be repaid. If they don't reply, you don't need to chase them.
    that doesn't work I don't think.
    If you raise an invoice for £10k and apply a credit for say £5k against it they owe only £5k against that invoice so that's all they'll pay. Which is sort of OK but doesn't factor in the overpayment. There will still be some money that shouldn't exist.

    2 choices here. Repay it, or don't repay it. But if you don't repay it it needs to be accounted for correctly. And an overpayment isn't so easy to account for correctly. As Craig@clarity suggested (the qualified accountant), make it income and pay VAT on it.

    Leave a comment:


  • d000hg
    replied
    Originally posted by TheCyclingProgrammer View Post

    If OP is going to invoice them again, they could apply any credit against the invoice directly but only if the client agrees. If the client wants the money back now they should give it back.
    So you send an email saying you will apply a credit against future invoice(s) unless they contact you how they wish the money to be repaid. If they don't reply, you don't need to chase them.

    Leave a comment:


  • BlueSharp
    replied
    Originally posted by TheCyclingProgrammer View Post

    If OP is going to invoice them again, they could apply any credit against the invoice directly but only if the client agrees. If the client wants the money back now they should give it back.
    Pretty much what the accountant said. Ask the client how they want to handle it. Still no word from them yet. I will chase again now Easter is over and everyone is in the office. I'm in meetings with the board next week so might mention it to the MD and FD if i get no response!

    Never worked for a client who is this disorganised before, the promised contract renewal needs to materialize by the end of next week as well otherwise I get an unexpected few weeks off while I get something else organised!

    Leave a comment:


  • TheCyclingProgrammer
    replied
    Originally posted by d000hg View Post
    Are you still working for this client? If so surely you can just correct in next invoice(s) with a note.
    If OP is going to invoice them again, they could apply any credit against the invoice directly but only if the client agrees. If the client wants the money back now they should give it back.

    Leave a comment:


  • malvolio
    replied
    Originally posted by d000hg View Post
    Are you still working for this client? If so surely you can just correct in next invoice(s) with a note.

    Someone's on their high horse.


    And someone's ignoring reality...

    Leave a comment:


  • d000hg
    replied
    Are you still working for this client? If so surely you can just correct in next invoice(s) with a note.

    Originally posted by malvolio View Post
    Because you are a company director with a set of responsibilities that include having a basic knowledge of accounting good practice (which is what this is).
    Someone's on their high horse.



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  • malvolio
    replied
    Originally posted by TheCyclingProgrammer View Post
    I’m not sure why people are advising you send the client a credit note - you would only do this if you’ve invoiced them for too much (a credit note reverses a sale).

    An overpayment is not a sale, it just sits on your books as a creditor amount - you owe them the money. DR bank, CR other creditors. When you pay them back it’s the reverse, CR bank DR other creditors. It doesn’t touch your sales account.

    You do need to chase them for their bank details and once you’ve got them, bank transfer it back again.

    Alternatively, if you expect to send them more invoices and the client agrees, you can keep the money sitting in credit and apply it to a future invoice. In this case you could send them a balance statement showing they are in credit.

    Here’s how you’d deal with it in FreeAgent, for example:
    https://support.freeagent.com/hc/en-...rom-a-customer
    Fair comment. I missed the somewhat relevant point about this being an re-payment of an old invoice rather than one issued in error/duplicate. My bad.

    Leave a comment:


  • TheCyclingProgrammer
    replied
    I’m not sure why people are advising you send the client a credit note - you would only do this if you’ve invoiced them for too much (a credit note reverses a sale).

    An overpayment is not a sale, it just sits on your books as a creditor amount - you owe them the money. DR bank, CR other creditors. When you pay them back it’s the reverse, CR bank DR other creditors. It doesn’t touch your sales account.

    You do need to chase them for their bank details and once you’ve got them, bank transfer it back again.

    Alternatively, if you expect to send them more invoices and the client agrees, you can keep the money sitting in credit and apply it to a future invoice. In this case you could send them a balance statement showing they are in credit.

    Here’s how you’d deal with it in FreeAgent, for example:
    https://support.freeagent.com/hc/en-...rom-a-customer
    Last edited by TheCyclingProgrammer; 22 April 2022, 00:10.

    Leave a comment:


  • Craig@Clarity
    replied
    Drawing on my days as an audit senior, the process back then which I still think is applicable now is to simply write to them to advise that they've overpaid and that you need their bank details to repay the cash. Meanwhile, it should be sat on your books under "Other Creditors". How many times you poke them for their details is up to you but if I recall back in the day, if you've received no response from them after two years, you can write it off as income in your business and pay the associated VAT to HMRC.

    Leave a comment:


  • malvolio
    replied
    Originally posted by BlueSharp View Post
    As I said I think the accountant will raise a credit note from looking online, I await their response. Why should I know that's the correct procedure? In 10 years of contracting this has never happened!
    Because you are a company director with a set of responsibilities that include having a basic knowledge of accounting good practice (which is what this is).

    I like the idea of sending them the credit note once I have it, keeps it nice and simple. Client accounts team were made aware a few days ago but have not responded (I have to chase every month for payment they are very disorganised) and I bought it up with the hiring manager yesterday who is also going to chase them. When I bought it up I offered the option of returning the money or writing it off against an outstanding balance - still waiting for their response.
    It's not an idea, it is the correct way to rectify the problem. If they then decide not to process your CN and offer some other route then fine, Just be certain your accounts are properly balanced and recorded.

    Thanks for the confirmation all, glad I'm doing the right thing here.
    Interesting interpretation of "right thing"... ... but you know the way forward now.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by ladymuck View Post
    You should promptly ensure the client's accounting team are made aware.
    Yep and sending them an email and not bothering following up they don't response isn't making them aware IMO.

    Leave a comment:


  • BlueSharp
    replied
    As I said I think the accountant will raise a credit note from looking online, I await their response. Why should I know that's the correct procedure? In 10 years of contracting this has never happened!

    I like the idea of sending them the credit note once I have it, keeps it nice and simple. Client accounts team were made aware a few days ago but have not responded (I have to chase every month for payment they are very disorganised) and I bought it up with the hiring manager yesterday who is also going to chase them. When I bought it up I offered the option of returning the money or writing it off against an outstanding balance - still waiting for their response.

    Thanks for the confirmation all, glad I'm doing the right thing here.
    Last edited by BlueSharp; 21 April 2022, 14:08.

    Leave a comment:


  • ladymuck
    replied
    I believe (with usual IANAL, IANAA caveats) that keeping money paid to you in error, when you know it's an error, is called theft.

    Your options are to return the money or issue a credit note.

    You should promptly ensure the client's accounting team are made aware.

    Leave a comment:

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