Underpaid invoice

[jlo1983]

Hello,

A trivial question (to some I guess), but looking for some help as a newbie...

Each month I submit 2 invoices to my agent, 1 for my charge-out rate and 1 for business expenses. For the last month, my agent has miss-calculated and underpaid my invoice by £10.
As a newbie, is it worth chasing this? I.e. is this sum crucial to ensure the books balance. If so, will the agent have to re-credit the previous amount paid, or will a payment for the difference (a tenner) be fine in terms of the accounts.

Appreciate it’s a measly sum, but just wondering the accounting principles are should this happen in the future.

Thanks!

[Bellona]

How can someone miscalculate an invoice?
Either they paid the wrong amount or they are disputing the invoice.

If the former, request they pay you the difference and credit both payments to the one invoice in your accounts.

If the latter then discuss with them and either issue them a credit note or, as above, get them to pay the difference.

The sum is, IMO, immaterial. Next time they might underpay you for a lot more !

HTH

[DirtyDog]

If you have invoiced for it, then your invoices and your accounts won't reconcile. You will need to account for the £10 as bad debt, or issue a credit note so that they balance.

Highlight to the agency that they have underpaid the invoice. If necessary, send a follow-up invoice. If there is a sum in dispute, then find out why they are disputing the £10.

Depending on your VAT accounting method, you either pay VAT on cash received or on invoices raised. If you are on the latter, then you have paid the VAT on the £10 over to the tax man already.

A bad debt is always worth chasing - if nothing for the simple reason that it's your money and you should get it.

[Craig@Clarity]

From an accounting point of view, you'll still have to account for the full invoice amount and be subject to tax on the net turnover regardless of whether you're underpaid by a tenner or not. The tenner itself will be shown as a 'trade debtor' meaning that it's owed to your company. It'll be easiest all round to simply get them to increase their next payment by a tenner.

You'll also have to pay the VAT (assuming you're VAT registered and on a VAT invoiced basis) on the invoiced amount. As an aside, the agent (again assuming they are VAT registered) would have claimed the VAT back too from HMRC on the invoice amount.

The tenner outstanding can be written off as a bad debt but only after 6 months if you want to claim back the VAT from HMRC on tenner amount you haven't received.

To simplify your admin, have you thought about and are you able to invoice for your day rate and expenses recharged on one invoice. If so, I've just halved your admin each time!

[Gordon Ice]

Beware the enemy

Never ever let an Agency get away with anything.. as soon as they learn you're willing to roll over it'll happen all the time.. get the old credit control processes dusted off..

[d000hg]

How can someone miscalculate an invoice?

A typo?

You should chase for it.

[jlo1983]

Underpaid invoice

Thanks guys - very clear! I'll get on to them.
Craig - yes, I originally invoiced using a single invoice for day rate and expenses but was advised to split these out by my previous accountant (in case of an error on the travel expenses it's easier to rectify).

One final newbie question.. My agent does not make any reference to invoice no. on their online bank transfer payments (to my business account).

As they are combining invoice payments I assume this will be ok for my accountant when he comes to do annual accounts from my statements? Obviously the agents name is on their as the sender so my accountant should I assume it should be a simple case of being able to tally up the total invoice payments.

[Craig@Clarity]

Thanks guys - very clear! I'll get on to them.
Craig - yes, I originally invoiced using a single invoice for day rate and expenses but was advised to split these out by my previous accountant (in case of an error on the travel expenses it's easier to rectify).

One final newbie question.. My agent does not make any reference to invoice no. on their online bank transfer payments (to my business account).

As they are combining invoice payments I assume this will be ok for my accountant when he comes to do annual accounts from my statements? Obviously the agents name is on their as the sender so my accountant should I assume it should be a simple case of being able to tally up the total invoice payments.

Shouldn't be that difficult to tally up if they pay in order of invoices issued and pay the correct amounts. If they underpay you for one invoice, it should be easy to spot it as the subsequent invoices should be cleared.

[DirtyDog]

As they are combining invoice payments I assume this will be ok for my accountant when he comes to do annual accounts from my statements? Obviously the agents name is on their as the sender so my accountant should I assume it should be a simple case of being able to tally up the total invoice payments.

If there is an easy way to make a note of it, then you could do that. For example, in the InTouch portal, I now add a comment detailing which invoice the bank payment refers to, so that it's easy to match everything at the end of the year if I've got something wrong.