Getting paid, business not ready...

[pelparc]

Currently setting up a business that makes custom made test equipment. Nothing is in place at the moment e.g. bank account, Partnership/ltd company etc.
A family member has been making the equipment for many years and they have decided to stop, hence my and anther persons interest. The opportunity is self funding and quite low scale, so time is the only real cost. The issue we have is that a potential customer in the far east has asked for a quotation, the sale value is only about £1K. As nothing is currently set in place, how would you recommend i mention payment on the quotation? Other existing customers in that area pay on account and they are extremely large organisations. Unfortunately using the existing family members business account is not an option.

The chances of the quotation actually becoming an order are very high, with a potential of future work.

Any ideas would be fantastic.

 

[Nochexman]

Do you have a website? Are you able to accept payments online?

 

[pelparc]

Thanks Nochexman,
Website is being made now. Each item is custom made so its not a typical buy online item, but we will have some items available to buy in the future. As this one is happening before we are ready, we do not have a merchant account or even a business bank account setup yet. I obviously can setup a PayPal account to get a payment, is there another way to look a bit more professional until we are setup?

 

[serendipitybusiness]

There is no way around it unless you can use another business to take funds right now but this may put your customer off. You could use your personal bank account but this may look unprofessional and a large company may worry about this especially if they are in the oil and gas sector.

You could submit a email quote for now and just put payment terms as direct bank transfer. If it is a large middle east company they may take a few days to confirm anyway as they will have to get it all signed off. Also today is a day off for many as their weekend is Friday and Saturday.

Go online and set up your limited company now, £12 and you are off. Then book an appointment and get your bank account sorted, I used HSBC and it was quick, so when you call ask how long it will take to get your bank account number. All you need is the bank account name, number, sort code, iban and swift number.

Then I would recommend setting up stripe for CC payments.

If you trust the customer and you don't have everything in place before it is confirmed you could always get them to send you a purchase order and just explain the situation or say you are restructuring so you are just waiting for the new details but this won't impact on their lead time. If they are in the middle east they will understand this.

You don't need to offer bank details until it comes to the pro forma stage so you probably have a couple of days at least to get it sorted.

 

[Nochexman]

Thanks Nochexman,
Website is being made now. Each item is custom made so its not a typical buy online item, but we will have some items available to buy in the future. As this one is happening before we are ready, we do not have a merchant account or even a business bank account setup yet. I obviously can setup a PayPal account to get a payment, is there another way to look a bit more professional until we are setup?

I would not worry too much about being professional at this point - you have made the sale, which is the important thing.

The only thing you could do perhaps from a professionalism point of view is to send them an electronic invoice and ask them to pay that, which both demonstrates you are a proper business and provides you with the means to get paid quickly. Getting an invoice account set-up takes a couple of days, so this is a quick way to get something done, and you can link that account to a personal account for the time being until you create a business entity.

I have to declare an interest at this point as the company I work for, Nochex, supplies internet payment accounts and provides e-invoicing.

Best wishes, Peter

 

[Chris Ashdown]

Tell them there is a 2 month waiting list, and you will get back to them nearer the time a slot is available
1K is not a massive order and you need to get organised first

 

[pelparc]

serendipitybusiness - Thanks, its actually the far east in the electronics industry (not that it makes a real difference). Is it better to be a limited or as a partnership, I'm not sure if you need to produce more detailed accounts and accountant fees for a ltd. company compared to a simple partnership/sole trader. For years it has generated a very small but steady income, however since October it has been very busy. So i don't really want to incur lots of ongoing costs until i know its worth doing.

Peter - Thanks again i will have a look at the electronic invoice option.

Chris - Agreed its not a massive amount in isolation, however its almost all profit with the opportunity of ongoing work, so differently not something i want to pass on.

 

[serendipitybusiness]

Ah okay that serves me right for posting after a busy day and dealing with a customer in the middle east lol! It does matter as it is a different culture, I am not sure what customers are like in the far east but in the middle east business can be more relaxed in my experiance.

If you are dealing with large companies I would go for a limted company, VAT registered. It is more paperwork and accountant fees are higher, however if you want to make a go of it then I think it is essential. If you do it right, it will pay for itself in no time, from the sounds of your initial order 2 jobs and you are paid up for the year, plus you can play then with PAYE and dividends.

However it will get you more business from the larger companies as they don't have to think twice, they will just order as they will assume you are a decent sized company.

 

[JEREMY HAWKE]

What an over reaction from everybody
If it is for 1k and you want to do this deal just give the custom your iban number for your personal account
A customer abroad won't even know care or understand what a personal or business account is in the UK !
If you are planning to trade from now it would be best to set up a company or sole trader ship with a business bank account

With this small order you are worrying about a problem that is not even there

 

[MOIC]

It’s only a Quotation that’s required at this stage, so there is no need to mention any payment accounts, just your terms of payment.

In any event, get a business bank account set up as your priority in case this enquiry proceeds further or you get other serious enquiries.

 

[menetworkjadaltd]

As mentioned above, if you are just providing them with a quotation, do not worry about the exact payment details.

Good job in getting your first interest at such an early stage

 

[pelparc]

Thank you all.
Re payment terms on the quotation, i am not particularly bothered about this one other than it could set a precedent on when they pay in future. Typically the other companies who have been buying these items have a long ongoing relationship and pay on account within 30 days. Is it the norm to offer an account from day one or should i request payment upfront. The actual cost if they didn't pay is quite small so not an issue.
Using my IBAN code solves the account issue, for some reason i thought you also had to enter your account name, but you don't so thanks Jeremy for making me look again.