Category Archives: Bookkeeping

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New VAT Rate

From Monday 1 December 2008, the VAT rate will drop to 15% and remain at this level until 31 December 2009, when it will revert back to 17.5%

The new VAT fraction is 3/23.

Invoice Payment Terms

Some common invoice payment terms:

  • Net 7 Payment seven days after invoice
  • Net 30 Payment 30 days after invoice
  • Net 60 Payment 60 days after invoice
  • Net 90 Payment 90 days after invoice
  • Net monthly account Payment due on last day of the month following the one in which the invoice is dated
  • EOM End of month
  • COD Cash on delivery
  • Cash account Account no credit given
  • CND Cash next delivery
  • CBS Cash before shipment
  • CIA Cash in advance
  • CWO Cash with order
  • 1MD Monthly credit payment of a full month’s supply
  • Contra Payment offset against the value of supplies purchased from the customer
  • Stage payment Payment of agreed amounts at stages
  • PIA Payment in Advance

Credit Checks

Before giving your customer credit, it is advisable to do some checks.  Below, in no particular order are some of the checks that could be made:

  • request a bank reference
  • request trade references
  • check the limited company’s details against Companies House
  • credit reference check
  • analysis of customer’s year-end accounts

You can ask for bank references, trade references (from your prospective customer’s other suppliers), you

Terms and Conditions

Hopefully, you will have already made your customer aware of your standard terms and conditions at the start of business relationship.  Many businesses consult a solicitor for help in setting these out clearly.

Having clear standard terms and conditions can help protect your rights in the event of a dispute.  Having them printed on the back of your sales invoice can serve as a timely reminder to your customer.

Your terms and conditions can cover such items as:

  • payment terms
  • credit limits and credit period
  • interest charges on late payments

Sales Invoicing

If you give your customers credit (and most businesses do), it’s important to get your invoicing and customer payments systems in order.  The obvious benefit is to aid cash flow and it is the first step to good credit control and fewer bad debts.

Some while ago, I posted about some basic details that need to be included on a sales invoice.  In addition, if the business is a limited company, the sales invoice must include:

  • the correct full company name (as written on the certificate of incorporation)
  • any “trading as” name or business name.
  • the names of the directors may also be included – but it is a case of naming all the directors or none at all.

Sole traders must give:

  • the business name, if the surname is not being used.
  • an address.

If the business is VAT registered, the VAT number must also be given.

It’s also important to send the invoices out as promptly as possible, particularly at month-end when many companies have a “cut-off” point and invoices received later are processed in the following month, resulting in later payment.

Payroll record keeping

Once a payroll is in operation, HMRC lay down certain requirements as to what records and information needs to be kept.  These include:

  • employees names, addresses (and their dates of birth)
  • gross pay, NICs, PAYE, other deductions, net pay (keeping a copy of their payslip would normally satisfy this requirement, assuming the payslip contained all the correct and required information)
  • copies of the employees’ P60
  • holiday, sickness, overtime, bonuses, commission details
  • value of benefits in kind and expense payments
  • amounts paid over to HMRC

Other information will also be required in the event of maternity/paternity/adoption and sickness/sick pay. 

In addition to records relating to payroll, you will be required to keep records relating to other matters, for example: hours worked, pensions, holidays taken, accidents.  (This is not an exhaustive list by any means)