Credit Risk

[backlight]

'50% in advance?' - 'No problem Sir. Being paid prior to any work being completed is standard practice in the market'

Advance payment is required on a good proportion of contracts. I would say it is standard practice. In fact I believe the last three contracts I have reviewed and approved on behalf of the client had payments due at contract execution. Of course I always try and have these reduced or removed but things usually end up in the middle.

Suspect I will meet in the middle as well with my attempt.

[ratewhore]

If you can get those terms backlight then fair play to you...

[DaveB]

That's a question: If your client goes bust and your invoice isn't get paid, do you still have to pay tax or VAT on it?

Also if you have money in your company bank account and the bnk fails, do you still have to pay tax or can you offset your losses at the bank against corporation tax? But of course if you are IR35 caught then there are no losses so how does it work then?

Depends on how you run your accounts. If you are using Cash Accounting, most people do, for VAT then you only pay tax on money recieved. If the co. doesn't get payed it doesn't pay tax on it.

CT is paid on profits over the year, if the co. didnt get paid then that amount can't contribute to net profit so CT is not payable on it, effectivly.

If the bank fails you still owe the tax but I would expect HMRC to be a little more forgiving about payment terms.

Saying that I don't belive the government would allow a high street bank to go under with it's customers money, they would either do a Northern Rock again or make it favorable for another bank to step in in the same way Natiowide BS has just done with the Derbyshire and Chesire BS's.

[Cyberman]

With big players now falling believe it’s time to tighten credit with my main client. They are overdue on two invoices currently so I’ll be on their case today, I’m also going to increase the invoice frequency and specify 50% of the monthly contract value in advance in the next contact I draft.

Don’t want to be stuck in line with the rest of the creditors if they go upside down!

It's a good move by yourself, however if everybody does this the whole economy could come tumbling down as cash flow worsens, escalated by less availability of loans and overdrafts.

[KentPhilip]

That's a question: If your client goes bust and your invoice isn't get paid, do you still have to pay tax or VAT on it?

Also if you have money in your company bank account and the bnk fails, do you still have to pay tax or can you offset your losses at the bank against corporation tax? But of course if you are IR35 caught then there are no losses so how does it work then?

[Gordon Gecko]

I am sure they'll change their policy to allay your concerns about their credit worthiness!

'50% in advance?' - 'No problem Sir. Being paid prior to any work being completed is standard practice in the market'

[backlight]

With big players now falling believe it’s time to tighten credit with my main client. They are overdue on two invoices currently so I’ll be on their case today, I’m also going to increase the invoice frequency and specify 50% of the monthly contract value in advance in the next contact I draft.

Don’t want to be stuck in line with the rest of the creditors if they go upside down!