To not pay over due invoices I just received immediately?

Do they have a half year end in June, and would your usual credit terms take payment into July?

I'd pay it as the 200k should be in your cash flow forecast.

If the agreement with outside companies is that they must send the invoice and then payment is made within 5 weeks then that’s that. They’ve only just sent the invoice so should wait the 5 weeks for it to be paid. They can’t agree to terms, fail to hold up their side and then demand immediate payment. That’s not how you run a business.

The account department wont always know every job going on; they rely on the invoices and the 5 week payment term to move the cash. If another company doesn’t want to agree to those terms then they just don’t need to do business with the OP’s company. But if they agree to the terms and do business together, then they need to hold up their side.

I’m a sole trader. If I forget to send an invoice, then I know I will have a longer wait. Mine have to be paid within 28 days. I can’t just change the length of time and demand it immediately if I forgot to send the first invoice out.

No don’t. Sending out invoices is actually a core function of a business and if you can’t be arsed then don’t expect other people to pick up the pieces of your incompetence.

I think if I had posted on here saying I had not sent invoices totaling to 200k does the customer have to pay me immediately the response would have been no.

That's not quite the same as what you're posting though.

A customer demanding payment before it's due is one thing, but a business refusing to pay is quite another.

Its probably someone internally at your end that has made a mistake or given the wrong info.

That was quick. And on a bank holiday too!

We do actually have the money there right now to pay it but I don't think we should pay it immediately

You're taking the piss then.

Yes.

Obviously if you have a PO raised and the work has been done/goods have been supplied then you should have the money available to pay for it.

If you have the money available, just sodding pay up.

Yes, of course you should! I can't believe you're even asking, tbh.

Your company has had 200k of work done and now needs to pay their bill. Not in instalments over three weeks. In full. As soon as possible.

I run a business myself and never, ever book anything I couldn't afford to pay for that day.

That's just being awkward for the sake of being awkward. Not very professional at all. I hope your firm don't need any favours from this supplier in the future as your Board/engineers won't be impressed if you've pissed them off for no reason!

Yes, of course you would. You really need to learn how budgets work.

Also, why are engineers raising POs and not the accounts department?

You do realise that if the company cannot pay it within a certain amount of time the company will be wound up?

I would start looking for other jobs.

Presumably this is a cash issue rather than a budget issue? How big a business are you? How come you weren't planning in the cash outlay - because you have e.g. 30 day terms agreed with everyone which gives you time to sort a drawdown from somewhere when they come in?

I guess £200k seems enough that you would either know it was coming (if you weren't very big) or it wouldn't be a problem and could be resolved in a couple of days (if you were big).

But most of the comments seem to think I completely BU and that this supplier has no responsibility to invoice themselves on time.

They should invoice on time, but as a business, you should know that 200k of work is being done and have the funds set aside to pay for it.

Someone invoicing late isn't a reason not to have the funds available to pay them.

@titchy makes an excellent point. If the invoices were sent on time, how would you have paid them?

Surely as an accountant this is something you’ve dealt with a million times before, I’m wondering why you’re talking like this is something out of the ordinary?

I’m not an accountant but a budget holder. If I was managing the work I’d have already had that in my budget so it wouldn’t be an issue. I get suppliers who have sent in invoices which have ‘gone missing’ and then ask for immediate payment. The AP team will deal with it and usually put it through the next payment run. As long as the supplier knows it’ll be paid it’s always fine, ‘immediate’ for us in this situation would normally be in a week rather than normal 30 day payment terms.

I’m really struggling to see the issue here.

Given you don't have the money to pay now, what would you have done if they had sent the invoice on time?

Going slightly against the grain, I don't see anything wrong with sticking to their terms of payment - they should be sending out invoices far more promptly. And presumably they won't want to lose you as a client if they're able to regularly bill you that amount.

That's said, you seem to have some pretty major cash flow issues (are you actually solvent?) so maybe they've got wind of that and want paying immediately.

@taxguru

100% with your post.

Exactly. When I was the company accountant for a design/manufacturing company, I had daily lists showing the following:

Purchase Orders raised (goods/services not yet received)
Purchase Orders raised (goods/services received)
Invoices Received

As each purchase order progressed, it moved from one column to the next, so I had complete transparency/awareness of our future obligations.

In fact, for the largest of transactions, I would insist on knowing even before the purchase order was formally raised as I insisted that the procurement/buying department would send me a memo with a copy of the proposed purchase order before it was signed off by a Board member, which gave me an opportunity to discuss it with the procurement/buyer and Board member before it was even formally issued if the magnitude of it or payment terms would cause a problem (i.e. to negotiate payment terms or give me time to get additional bank finance to cover it).

To do the job of an accountant properly, you need to be proactive and not reactive. Only knowing about an invoice when you actually receive it is absolutely insane, especially for large amounts.

Honestly - it’s constant.

I had a company cancel my order recently and instead of refunding me wanted to reschedule - we’re only talking £1500 and they had to repay in 4 instalments. And I had to chase every single payment. They were clearly both insolvent and poorly run.

The number of businesses robbing Peter to pay Paul is scary.