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  • #975062
    kiwihelenm
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    Hi

    We have taken over a business and discovered a LOT of outstanding accounts that have NEVER been invoiced dating back almost two years. Are we legally able to invoice them now? What are the rules over late invoicing ie back into prior financial years? We can show we provided the services and even have purchase orders its just that the staff never sent the invoices. Any help to clarify what to do would be most apprciated. Cheers Helen

    #1072117
    SalenaKnight
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    I’m on the other side of the fence. I asked a major newspaper for my invoices for 9 months, and never got any (so couldn’t pay).

    I finally got one after they were externally audited and was charged for loads of things that ran incorrectly, and was told I would receive free ads.

    The bill was thousands of dollars, and they wanted payment in 7 days! I just kept ringing and complaining, and 3 months later, we’ve finally sorted it out. However, in that time, none of my ads ran, and I feel I lost customers (not even going to pursue that one).

    Sooo, if I can pay 12 months later, I can’t see why you can’t bill that late.

    Depending on the size of the invoices, perhaps offer a payment plan (ie pay over 3 months). At least that way, you’re more likely to get your $$.

    Good luck!

    #1072118
    Anonymous
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    This is not legal or accounting advice only a possible of suggestion of what I would do

    This might help you out a little bit ATO late Payment

    But Given the length of time and the previous owners (appeared) lack of management ability, I would suggest looking at the “Sale of Business” contract. A smart business accountant/lawyer would/should have informed you to make sure all accounts are upto date.

    It would be a bonus to get paid, however I wouldnt push it to hard, if they refuse to, given the length of time and write them off as losses against the business (bad debts).

    In an attempt to recover those amounts,

    Putting this as nicely as possible:

    I would send the invoice (without interest charges) and a personal letter stating that you are the new owners of the business, and due to the change in owners-ship all accounts must be settled with-in 30 days (payment options maybe needed depending on the size of the accounts).

    Worded correctly (nicely) and you might just get paid, I however doubt you would get paid the whole lot, so somewhere between 25-50% would probably be good repayment over 50% I would consider a bonus.

    #1072119
    MyGreatIdea
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    I would have thought that, since you purchased the business without these amounts as outstanding debtors (you say they have never been invoiced), then it’s not your money to be chasing up, simply a loss of income for the previous owners.

    If this is the case, would it be worth damaging customer relationships over it?

    Wendy :)

    #1072120
    John C.
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    I have no idea about the legality or ethics of invoicing these customers so far after the transaction, especially as the business has changed hands, but I would have a concern about sending out invoices without doing some homework.

    I personally would ask myself two questions before sending out any invoices to customers and risking damaging any relationships:

    1. Is it possible that the past owner did recieve payment for these goods or services but didn’t record them because he was dodging tax?
    2. Is it possible that the previous owner did invoice these customers but the records have been lost?

    Good luck with it.

    Cheers,
    John

    #1072121
    bluepenguin
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    In addition to above, there’s also the chance that the previous owners were paid “cash under the table” for these jobs.

    I’d make sure that whatever you do, you don’t damage any relationships with your clients. I’m sure that if someone got an invoice from several years ago and a letter demanding payment, they’d be a bit puzzled, and maybe a bit angry. Afterall – It’s not really their fault they haven’t paid yet.

    #1072122
    Anonymous
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    Im sorry peoples if I wasnt very clear in what I said :(

    It is a very messy situation to have.

    You have 1 of 2 options to decide first,

    1) (the easiest and much simpler) write off all these accounts as bad debts, with the help of a good accountant, reconcile them so that if these customers return to you, they start with a clean slate.

    2) review what the conditions were under the ‘sale of business’ contract, ie were all accounts supposed to be paid up and finalised on sale, or did you accept the business as is with all liabilities (bad debts, company leases/rents, loans).

    Dependant on what was in the “sale of business” contract then what couple it says could be the case, in which even if were to receive the out-standing accounts the money in theory belongs to the previous owners, not you.

    As onsiteTechs and Blue penguin said, the problem with chasing such old accounts is the “possible” damage to your business reputation with customers,

    but for the ATO you need to have it sorted out quickly before you start trading for to long.

    Still in DOUBT ring the ATO themselves, or get a good accountant to help you to clean up the messy books (legally).

    #1072123
    BrettM33
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    Personally since you are not really taking a loss and the older owners are I would not worry about it (depending on the amounts though of course).

    I would however send them a nice letter detailing the situation and mention that as a gesture of good faith you will be wiping their debt. This may help them become repeat customers of yours in the future. :)

    #1072124
    The Copy Chick
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    CondorCreative, post: 90482 wrote:
    Personally since you are not really taking a loss and the older owners are I would not worry about it (depending on the amounts though of course).

    I would however send them a nice letter detailing the situation and mention that as a gesture of good faith you will be wiping their debt. This may help them become repeat customers of yours in the future. :)

    Totally agree. If I were a customer and received an invoice 2 years after the fact, you can rest assured I’d be telling you where to put said invoice!

    As the new business owner, I’d be checking obligations with the ATO and writing them off as bad debts incurred by the previous owner. Then I’d be assessing the competency of my staff (if the same team is still in place) and having some major staff training sessions, and perhaps writing up some new procedure manuals.

    #1072125
    StellarScott
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    cretsiah, post: 90380 wrote:
    Im sorry peoples if I wasnt very clear in what I said :(

    It is a very messy situation to have.

    You have 1 of 2 options to decide first,

    1) (the easiest and much simpler) write off all these accounts as bad debts, with the help of a good accountant, reconcile them so that if these customers return to you, they start with a clean slate.

    2) review what the conditions were under the ‘sale of business’ contract, ie were all accounts supposed to be paid up and finalised on sale, or did you accept the business as is with all liabilities (bad debts, company leases/rents, loans).

    Dependant on what was in the “sale of business” contract then what couple it says could be the case, in which even if were to receive the out-standing accounts the money in theory belongs to the previous owners, not you.

    As onsiteTechs and Blue penguin said, the problem with chasing such old accounts is the “possible” damage to your business reputation with customers,

    but for the ATO you need to have it sorted out quickly before you start trading for to long.

    Still in DOUBT ring the ATO themselves, or get a good accountant to help you to clean up the messy books (legally).

    Theyve never been invoiced so theres no bad debt, nothing to write off

    Im in the they were paid cash corner…which means you might have a much better business than you think :)

    #1072126
    MattR
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    Agree with SS above, as no invoice raised there is no bad debt.

    I would also consider reviewing the contract for Sale, you may end up if you pursue the “debts” actaully owing the money to the old owner.

    And as per Condor and BluePenguin I would also look at using it as a PR excercise and as a way of introducing yourself to these clients. They may know that they didn’t pay for that service/product, and so may not have respected the business (owners), but if you show youre on the ball, that can be a positive in ongoing relations – as long as you follow up with prompt reliable etc. service.

    Good luck…like to know how it pans out.

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