30 day payment terms, take dividend before cash payment?

[nfoote]

Real quick question;

Invoice raised and sent to customer on 30th of June.
30 day payment terms so payment due on 30th July.
Current date, 7th July.

FreeAgent reports I have distributable funds now (7th July) so does that mean;
A) the company "earned" the money as soon as you raise the invoice?
B) I can take a dividend now (assuming there is cash in the company account reserved for other things like tax) even though the cash from the invoice won't land in the company accounts for a few weeks (thus covering the tax responsibility again )?

[Wanderer]

B) I can take a dividend now (assuming there is cash in the company account reserved for other things like tax) even though the cash from the invoice won't land in the company accounts for a few weeks (thus covering the tax responsibility again )?

According to the PCG you can go right ahead and pay a dividend as soon as the invoice has been raised.

[Sockpuppet]

As long as there is profit in the company you can take the dividend, you can do this before the cash lands. Best idea might be to lend yourself <£5k from the company until the payment lands then do a div to clear the directors loan account.

[Greg@CapitalCity]

Payment

Just be careful with this. I am sure you will be fine, but in the event your client decides not to pay then you will get yourself in a spot of bother! If there is any doubt, go down the loan route. It can be over £5k and not incur any loan interest so long as the the loan, and then loan repayment transactions, are completed between the 6th of one month, and the 5th of the next month.

[Scrag Meister]

Just be careful with this. I am sure you will be fine, but in the event your client decides not to pay then you will get yourself in a spot of bother! If there is any doubt, go down the loan route. It can be over £5k and not incur any loan interest so long as the the loan, and then loan repayment transactions, are completed between the 6th of one month, and the 5th of the next month.

WGCCS

IMHO it pays to have the cash in your bank before spending it.