Invoicing / payment terms

[techno]

Hi

I have been on a (direct) contract with a software consultancy company for the past year but now their end client has taken on the contract (with the full blessing of the software consultancy).

Initially the client stated they would honour the outstanding PO T&C's but have have just received the following email in changes they want to do on invoicing & payments..

"...like to change the invoicing to fortnightly in advance apposed to weekly arrears if you agree..."

and also

"...you will be paid straight away when you give me the invoice, so just state that on the invoice text and you’ll get a cheque in a couple of days..."

Now ever since the dark days of permie, and since being freelance my brain has always accepted IN ARREARS.

I think I am having a brain-freeze and wondering if this is a good idea to be paid in advance??!?!?!?!?!?

Or is this too good to be true?????

[Jason]

Probably

They *may* be good, but in my experience, I have never met a company that pays suppliers in advance. For them it is simply bad management of cash flow.

Invoicing may be done in advance, but that does not mean payments will be.

I invoice every two weeks and the invoces are paid 30 days later.

I am thinking they wrote the email without reviewing it, and have simply made a mistake.

I would email them asking for clarification and ask for it to be written into the contract if they say, yes this is exactly what we meant.

[techno]

Well, it is now confirmed this is the way they want to proceed and it is now written into the contract

[BrowneIssue]

So in effect they are raising a purchase order for your services and you are responding with an invoice.

I know another contractor who works this way with a long established client.

They buy 30 to 120 days of his time against a Purchase Order. That will get used up over a couple of months to a year, depending upon what they may need him for. He raises the invoice straight away and they pay bits every so often.

Sounds similar in concept to what you are going to be doing.

[VectraMan]

MOO problem? If it's invoice in advance for 20 days every month, then that's an obligation. If it's 20 days, but we're not sure how long it'll take to get there, then it's not.

[Ardesco]

Don't see how this is a MOO problem to be honest. You are being paid in advance for 20 days work, if they don't have any work for the next 20 days they won't pay you.

If I pay sky £30 in advance for satellite TV is that a MOO issue? I think not.

Some people really go OTT with the MOO arguments

[VectraMan]

Don't see how this is a MOO problem to be honest. You are being paid in advance for 20 days work, if they don't have any work for the next 20 days they won't pay you.

What happens if you're ill, or otherwise unable to work, or something else happens that means they have to cancel the work half way through? If they've paid you anyway then that's a bit like being an employee - i.e. no risk on your part. Also if they've paid you in advance, is that not an obligation on you to accept the work?

Maybe. I think I'd be concerned this represented an increased risk, even if it doesn't prove anything by itself.

[Ardesco]

You can always pay it back. (That would be a refund for services not provided)

[techno]

This is my main client so even though it is not 20 days per month it will effectively end up being that. When I do the odd day here and there (on plan B) I will have to issue a refund/credit or simply reduce the next invoice so their "pot" is always topped upto 20 days

e.g invoice goes out for 20 days but i only work 17 (leaving 3 left) then the next invoice goes out for 17 bringing the total upto 20.

[Cred-X]

Could it be that they are looking to take advantage of tax dates or would prefer to show prepayments in their accounts ??