Home – New Forums Money matters Rejecting an Invoice

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  • #986186
    • Total posts: 1

    Hi Everyone,

    I was wondering if you could help me out.

    I am a technology application consultant working mainly with businesses that come up with new programmes and products and identifying their potential for market application and revenue generation.

    One of my clients has a problem with a particular client who is not paying their invoice constantly rejecting the invoice for reasons such as a typo in the footer (Receipt was spelt “ie” in the footer but correctly in the Header), wrong account manager’s name (it was addressed to the account manager that booked and signed the work it but the client is claiming that it was a different account manager responsible for approving the work).

    Now they are claiming to reject the invoice because the date it was dated was five days prior to them receiving it and they want a new invoice issued with today’s date.

    I know this is a ploy for them not to pay but I have told my client I will ask around and try to find out.

    My questions are these:

    1. can you reject an invoice and demand a new one issued because the date of the invoice is different from the date of receipt?

    My client reissued the invoice with the date that they acknowledged they received it but they want it reissued with today’s date. My understanding is that you would reissue only with the date of acknowledgement of receipt.

    2. if he was to reissue an invoice with todays date can he make the payment terms 7 days as another 30 days will make this invoice 120 days since first issue.

    3. Should he just proceed to legal?

    Many thanks

    • Total posts: 1,815

    I’m sorry, but the only reason to reject an invoice is for work that is shoddy or incorrect supplies etc. A typo or date is irrelevant.
    I am a stickler for grammar and spelling myself, but I would never pick on someone’s invoice spelling.

    The client is just giving you the run around.

    There are a few debt collectors on FS – or in the directory here http://www.flyingsolo.com.au/directory/Finance-Insurance/Debt-collection
    Maybe it’s time now. Then it is out of your hands.
    All the best.

    Cooke Consulting
    • Total posts: 122

    This really isn’t a debt collector issue (yet) this is a process issue with your clients invoicing structure.

    I would not suggest going legal, mainly because (based on your post) your client hasn’t attempted to request payment and has been more reactive to the invoicing issues that their client is imposing.

    If there are any “real” issues that are the reason why the client is withholding payment – get them resolved first.

    Otherwise treat this like any other outstanding invoice, have your client go through their internal collection procedures first, then once they have made their collection attempts and if it still remains unpaid – then hand it over to a debt collector.

    Healthy Personal Finances
    • Total posts: 194

    I would refer to the terms of contract between the supplie rand customer. I get all my clients to sign an engagement letter saying that all invoices are to be paid within 14 days of the invoice being receded (and because they receive it the day I send it via email it is effectually 14 days from the date of the invoice).
    I also have a disclaimer that all work will cease until outstanding invoices are paid and any loss during this time to their business is no fault of my own.
    I highly recommend every business signing either a quote or contract with their customers which enforces the payment terms.
    Invoices can be rejected if they are not in the correct ATO format for Tax invoices – however it sounds like this is not the issue.
    I have had clients reject invoices for the wrong persons name – and that is purely because at their end they have to match invoices to purchase orders – so it is doesn’t match – their system simply rejects it.

    Recovery Russ
    • Total posts: 36

    Hey Shamaccas,

    There are legitimate reasons for rejecting an invoice but it doesn’t sound like any of them apply to the situation your client has. Mostly you will run into problems if you don’t disclose the GST component correctly. The amount of information you need on your invoice depends of how much the invoice is for.

    You can find the ATO’s invoice requirements here – http://www.ato.gov.au/Business/GST/Accounting-for-GST-in-your-business/Requirements-of-tax-invoices

    With regards to the payment terms, you generally need to refer to whatever the payment terms were agreed to prior to the work being completed. If nothing was specifically agreed to, then you just need to be able to justify the terms as “reasonable”. That could be a day, a week, a month or more depending on your industry.

    If they are complaining about which account manager the invoice should be addressed to just don’t put one on the invoice. It’s not required. Just state the liable entity, usually the trading name or registered company name is enough, and let them sort out their own internal management. It’s not your client’s job to figure out the company structure and job descriptions of the staff of their debtor.

    It is most likely too soon for legal action right away. Your client could just ask them in a straightforward way what the real issue is. If they just need some more time to pay you could offer a payment plan rather than pretend that the spelling of the word invoice really matters. Alternatively they may have concerns with the quality of the work and they have no intention of paying you at all, in which case you want to know this ASAP so you can either remedy the problem or move forward with other action before it gets too much later and more complicated.

    In either case I’d recommend that they reissue the invoice (or resend the same one you already sent if it complies with the ATO’s invoice requirements) and attach a cover letter to reiterate the due date for payment and explain what the potential consequences will be if payment isn’t made on time. (Be that legal action, referral to a Collection Agency, mediation etc.)

    Make sure you are prepared to follow through with what you say you will do if they don’t pay on time. Nothing makes a debtor think they can get away with not paying like an empty threat.

    Whatever they do I’d be interested to see how you get on.


    • Total posts: 284

    There buying time.

    It’s actually a ludicrous strategy, I’ve heard of people not paying if they don’t receive an invoice but christ!

    Anyway Recovery Russ made all the points clear, but if it does elevate to a legal stage, then scrutinise it yourself. Just watch for those commas and periods they use ;)

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