Re: [SL] How to account for pre-payments

[Paul T. <pt...@wa...>]

I am not against payment of services.
I just suggest the service provider could (and should in my opinion) send an
invoice.

For example, contracters here in Holland start building the house after
receiving payment for the invoiced 20% 'up front' part of the building
contract. Then, after the foundation or some defined part of work is
finished, they invoice the next 10 % and so on, till the house is finished,
all work done is invoiced and off to the next project.

Same for accountants; when they take on a job (say control of anual
accounts), they send an invoice for 20 or 50% at start, rest after the job.

The only reason I can come up with for NOT sending invoices and yet to ask
for payment (advance, whatever) is to postpone taxation: once he invoice is
sent, tax is due. So let us wait as long as possible to send tjhe invoice.

At this point in time, with people and businesses going bankrupt every so
often, I would be very hesitant to pay with or without an invoice, but not
having an invoice (or reminder if cash is low) would not prompt me to pay
anything whatsoever.

2009/5/7 Mark Phillips <mar...@mo...>

>
> On May 6, 2009, at 10:31 AM, Paul Tammes wrote:
> > Why prepay at all? Especially an accountant should see the logic
> > that one
> > has to send an invoice in order to get paid.
>
> I respectfully disagree. It is quite common for many businesses to
> require a retainer or "advance billing deposit". Some will not begin a
> project until funds sufficient to cover the anticipated work are
> deposited, even as much as 100% of the anticipated billing. Some of
> these will produce an invoice based on an estimate or contract, then
> amend if required.
>
> Others do not invoice until the end of a project. In the meantime, the
> estimate serves as the controlling document, with funds advanced and
> charges tracked against the estimate. At the time of invoice, the
> charges and payments are tallied and posted so they appear on the
> invoice and are "booked" in accordance with the accounting policies of
> the client.
>
> FWIW, I have no idea how this fits into SL, so my comments are more
> general in nature. That said, I have created such processes in the
> software applications we maintain and develop for clients. As another
> poster wrote, the point is to make sure the value of the service or
> product is compensated, or more plainly, to make sure you get paid.
>
>
> Mark Phillips
>
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