Paying suppliers without receiving an invoice

[ImranR]

Hi all,

I am looking at improving my workflow. I have a team of people that I utilise on a subcontracting basis. They are all limited companies and provide services on either hourly or day rates. Sometimes I agree set fees with them.

They are all really good but they are a nightmare when it comes to invoicing. I like to settle payments ASAP so I am forever chasing invoices from my contractors. Also, they often end up sending me incorrect fee amounts both over and below the correct amount. This leads to a colossal amount of unnecessary admin and chasing to resolve not withstanding the number of invoices and credit notes I then have to collate and file. (You can tell the contractors are not very good with paperwork!)

My question is: -

Is there an acceptable way (HMRC compliant) where I can pay these guys without an invoice that will be compliant for both Limited entities. I am thinking something along the lines of a document that I can email to the contractor confirming settlement/payment which both of us can retain as like a VAT/HMRC compliant invoice (basically, I want to do their paperwork for them!)

P.s. all the contractors are VAT registered.

Thank you all.

 

[Scalloway]

Personally I wouldn't bother paying them until I got an invoice. If they are VAT registered only they can produce a valid VAT invoice.

Also I would suspect that paying them without valid paperwork might make HMRC think they are your employees.

Is there a reason that you have to pay them when you do?

 

[AstEver]

Can a self-billing arrangement be a solution?

 

[TheCyclingProgrammer]

If VAT is involved then you need a valid VAT invoice and they should be providing one.

A self billing agreement as mentioned above could be a solution of you’re happy to raise invoices on their behalf.

 

[NicoJ]

Agree with the self bill solution. Google "self-bill" - you have to have an agreement signed by the subbie and a line on the invoice stating they accept the document as their VAT invoice.

 

[ImranR]

Thanks everyone. The self billing solution sounds like the perfect thing. I will look into it.

Does anyone know if software like Xero can deal with self billing invoices? As part of my streamlining plans, I was looking to start using a accounts software which is probably going to be Xero.

Thank you