Deferring Sales (and Associated Costs) to Following Period

[leedsCIMAstudent]

Hi folks,

My sales manager has asked a question of me, that I am struggling to answer. Essentially he has an outsourcing contract made up of a monthly fee (covering base level IT support for an office) then there are extra ad-hoc things (new PCs, relocations, etc). Due to the client requesting more ad-hoc work than anticipated, my sales manager has been told that there isn't enough money available to pay (what would be) March's invoice for monthly fee.

Is there anything to stop him invoicing for March work in April (which is both our and the clients' new financial year). Given theres no way it will be paid in March anyway, it would at least be matching the invoice to the payment receipt.

Would there be any VAT or corporation tax implications associated with doing this?

Cheers

[jpcentral]

There are both VAT and Corporation Tax issues with what you propose. If the money is due for work carried out inMarch, it should be invoiced in March. You can agree to accept a late payment but your year end accounts should show the debt as an asset (debtor) and your client's accounts should show the amount due to you as a liability.

John Perry
Central Business Services
Loughborough
www.centralbusiness.co.uk

[leedsCIMAstudent]

John,

Thanks for your response. Is there any way round it, anything that a little planning could achieve?

If both the company I represent and their client want to defer, is there any way that this can happen?

Finally, if there is no way to do this, can you advise what specifically would prohibit it?

[PRN]

If both you and your client agree, then raise the bill in April(After couple of weeks in April) and mention in the bill that it is for services rendered in April