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An agency that doesn't use invoices
Thread poster: Elina Sellgren

Elina Sellgren  Identity Verified
Finland
Local time: 23:17
Member (2013)
Finnish to English
+ ...
Nov 19, 2013

I recently got a new agency client that has been very professional in communication and everything. But when the time came to ask for their invoicing information, they replied to me that they "don't usually work with invoices" and that they pay via PayPal. (I did not ask for a PO initially because I have other clients who never send one but accepted invoices, with no problems with payment.)

And since they didn't have an accurate invoice from me stating the word count and agreed rate and total sum, they paid a too small sum first and I had to ask for a correction - they did pay the whole sum very quickly with apologies and it might have been a genuine mistake, but even so it just goes on to show why invoices are needed, as well as POs.

This agency supposedly has local offices in a couple of different countries (probably P.O. boxes). How is it possible to have a company that doesn't need to use invoices? Can it be legal? Are they evading taxes? How could they do their accounting right if they don't have accounting records/invoices for purchases? (They have mentioned having an accounting department, but it may exist only in words..)

If this agency was located in Finland, it would definitely mean they are avoiding taxes and I would have to cease collaboration. But regarding international agencies that probably do not have a concrete office in any country... is there perhaps a loophole for this? Will I be compromising my ethics if I continue business with them?


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Lincoln Hui  Identity Verified
Hong Kong
Local time: 04:17
Member
Chinese to English
+ ...
Depends Nov 19, 2013

Some companies just do internal records and don't ask for invoices from contractors (although some will accept them for cross-checking/record keeping). It's not necessarily a good practice, but it does exist, and it doesn't mean that the company will avoid payment. It may be less paperwork to deal with just their own records, rather than process invoices from each translator who may all have their own formats, just as an example.

You can always send your own standard invoice anyway and ask for confirmation if there's any discrepancies.


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Elina Sellgren  Identity Verified
Finland
Local time: 23:17
Member (2013)
Finnish to English
+ ...
TOPIC STARTER
Thanks Nov 19, 2013

Ok, makes sense! I will have to create my own invoices in any case, they just don't need them..

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xxxnrichy
France
Local time: 22:17
French to Dutch
+ ...
If you don't send invoices Nov 19, 2013

you open the door for all kinds of abuse, for instance being paid only half of the amount, or nothing at all. Then you will be unable to state that you are in good faith, you cannot send registered letters with the invoice attached nor ask the services of a lawyer or a collection agency.

Sometimes private persons don't want invoices, but in this case you also need to make one, just to be sure that there will be no problems in case of any questions from your tax office.


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Mike Sadler  Identity Verified
United Kingdom
Local time: 21:17
Member (2011)
Spanish to English
+ ...
Send one anyway Nov 19, 2013

Lincoln Hui wrote:

Some companies just do internal records and don't ask for invoices from contractors (although some will accept them for cross-checking/record keeping). It's not necessarily a good practice, but it does exist, and it doesn't mean that the company will avoid payment. It may be less paperwork to deal with just their own records, rather than process invoices from each translator who may all have their own formats, just as an example.

You can always send your own standard invoice anyway and ask for confirmation if there's any discrepancies.



Just as Lincoln Hui says, you could create an invoice as per your normal practice and send it to them. They can then do what they like with it, so long as they pay you correctly.

BTW, I work with one very professional agency in the USA, that I'm sure is kosher, which does not ask for invoices. They send me a statement showing what I've done (invariably small, quick jobs that would take as long to invoice as they take to do) and then pay me by Paypal. It works well.


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John Fossey  Identity Verified
Canada
Local time: 16:17
Member (2008)
French to English
Issue your own invoice to protect yourself Nov 19, 2013

As others have said, send your invoice anyway. I have a client - a large, multi-national company whose end clients are governments - who states very plainly in the fine print of their terms and conditions that they ignore invoices and generate payments internally from their system. When a job is completed you have to click a "request payment" button and as long as there are no issues, payment arrives a set number of days later. I send the PM an invoice anyway, because it has my own terms and conditions as well as for my own tax record and I haven't had any problem.

They may say they ignore my invoice, but if I have another tax audit (I have had 3 over the years) they will find very quickly that it's only my invoice that counts to the tax auditor!


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Elina Sellgren  Identity Verified
Finland
Local time: 23:17
Member (2013)
Finnish to English
+ ...
TOPIC STARTER
Good point.. Nov 19, 2013

John Fossey wrote:

As others have said, send your invoice anyway. I have a client - a large, multi-national company whose end clients are governments - who states very plainly in the fine print of their terms and conditions that they ignore invoices and generate payments internally from their system. When a job is completed you have to click a "request payment" button and as long as there are no issues, payment arrives a set number of days later. I send the PM an invoice anyway, because it has my own terms and conditions as well as for my own tax record and I haven't had any problem.

They may say they ignore my invoice, but if I have another tax audit (I have had 3 over the years) they will find very quickly that it's only my invoice that counts to the tax auditor!


Hmm, it hadn't occurred to me that they might have audits for private entrepreneurs who may not even be outsourcers. I thought I would just prepare my invoice for my own records, but it may indeed be necessary to also send it to the client, whether they ignore it or not, to get the record in my sent emails - otherwise I suppose it is not a valid invoice for bookkeeping..


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Sheila Wilson  Identity Verified
Spain
Local time: 21:17
Member (2007)
English
+ ...
You're running a business, too Nov 19, 2013

nrichy wrote:
you open the door for all kinds of abuse, for instance being paid only half of the amount, or nothing at all. Then you will be unable to state that you are in good faith, you cannot send registered letters with the invoice attached nor ask the services of a lawyer or a collection agency.

Whatever your clients say they need, you as a business (albeit a very small one) have both rights and duties, and you must insist on fulfilling them.

I work occasionally for one of the very largest translation companies in the US (or at least that's where my payment comes from), normally to the tune of several hundred dollars so the income wouldn't be ignored by tax inspectors. This client said the same thing - do not send an invoice. Their payment procedures don't allow for me to add my invoice number or any other information required by Spain, nor do they even have a print function - it's all quite bizarre, but the interface is really good - simple and fast. So, good for me personally, but not good for my business. Like it or not, they receive from me a very simple Spain-legal invoice that just refers to their PO number and the total. I know they don't file it anywhere but that isn't important. What's important is my audit trail for the Spanish tax authorities.

Sometimes private persons don't want invoices, but in this case you also need to make one, just to be sure that there will be no problems in case of any questions from your tax office.

Absolutely. They can put a paper one in the bin very easily; it's even easier to click "X" on an email and its attachment.


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neilmac  Identity Verified
Spain
Local time: 22:17
Spanish to English
+ ...
Customer is always right? Nov 19, 2013

Of course you can issue your own invoice to send to the agency to let them know how much they need to pay you. However, as they are obviously not paying any taxes in your country (and probably not in wherever they are working from either), your bill should also omit these items, or enter them as zero.

Then it is up to you whether or not you declare this earned income along with your "normal" bills in your standard tax return. I find it interesting to see how the reactions to this post vary between countries. I've asked around about this kind of thing in Spain and had different answers, ranging from telling me not to bother declaring it as the bill in question included no taxes, to declaring the full amount along with the company details.


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 22:17
Member (2005)
English to Spanish
+ ...
Some companies accept electronic invoices Nov 19, 2013

I have several customers in the US who do not require invoices on my part. I do have to enter an electronic invoice in an online system they use, and my entry of the invoice amount and other details serves them as an invoice towards their tax authorities.

Edited to add this: Of course, I have to issue my own invoice here even if the customer does not want it, and present that to my tax authorities in Spain so that everything matches.

[Edited at 2013-11-19 16:12 GMT]


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Jessica Noyes  Identity Verified
United States
Local time: 16:17
Spanish to English
+ ...
US company Nov 19, 2013

I occasionally do translations for a company that states up front, on their web site, the number of words (or the number of pages, for certificates) and the amount that will be paid for each job. I understand that the idea of the client setting the rate is generally considered inappropriate; but of course, the other members of their pre-selected team for this pair and I can decide whether or not to accept the job. In any case, there is a clear record of what the payment will be.
The week after I have done the translation, like clockwork, the fee appears in my PayPal account. Because I dread the invoice-creation phase of the job, not having to prepare one partially compensates for their somewhat low rates.


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xxxnrichy
France
Local time: 22:17
French to Dutch
+ ...
Is this a difference between Europe and the US? Nov 19, 2013

Jessica Noyes wrote:

I occasionally do translations for a company that states up front, on their web site, the number of words (or the number of pages, for certificates) and the amount that will be paid for each job. I understand that the idea of the client setting the rate is generally considered inappropriate; but of course, the other members of their pre-selected team for this pair and I can decide whether or not to accept the job. In any case, there is a clear record of what the payment will be.
The week after I have done the translation, like clockwork, the fee appears in my PayPal account. Because I dread the invoice-creation phase of the job, not having to prepare one partially compensates for their somewhat low rates.


I do too, but the prices of "what the payment will be" are in most cases half or one-third of my prices. In some cases I quote my own price and it is accepted. But I always have to quote my own price, I have my own business after all and cannot work under such binding conditions. Nice that it is stated upfront, but if the client doesn't state something I make a written quote and wait for it to be confirmed.

As for working without invoices, this is out of the question of course, even if I have confidence in the client, because the accountant and taxman would immediately suspect me of cashing undeclared (if not illegal) money.


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Neil Coffey  Identity Verified
United Kingdom
Local time: 21:17
French to English
+ ...
For some countries, "invoices" are for corporates only and/or may not serve a purpose Nov 19, 2013

Elina Sellgren wrote:
This agency supposedly has local offices in a couple of different countries (probably P.O. boxes). How is it possible to have a company that doesn't need to use invoices? Can it be legal? Are they evading taxes?


Hi Elina, Just to corroborate slightly what other people have said: it is conceivable, depending on their country and tax regime, that an "invoice" from you doesn't serve any purpose for them. Presumably, the tax office in their country will be more concerned about money that they are receiving rather than money they are paying out, and if they're not allowed to tax-deduct the money they're paying you, then the invoice from you probably serves no formal purpose for them. If this was the case for a translation agency, it would put them frankly at a bit of a disadvantage, but it's feasible.

However, if your tax regime in *your* country requires you to issue an invoice, even though it serves no formal purpose to the agency, you should still do so. (I think that means that if you're based anywhere in the EU, you need to issue an invoice, for example.)

If, formally speaking for tax purposes, neither you nor the agency requires the invoice, you are still free to issue a "Pro forma invoice", meaning an invoice that sets out all the details of the agreed payment, but which isn't actually used formally for tax purposes. From your point of view, I can't see any reason for not doing so.

As far as I'm aware, Paypal payments are fairly traceable and Paypal have to implement statutory measures to detect tax fraud and money laundering, so so long as they're actually paying you what they owe you, I think Paypal is as safe as anything.


[Edited at 2013-11-19 23:02 GMT]


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Neil Coffey  Identity Verified
United Kingdom
Local time: 21:17
French to English
+ ...
P.S. that said... Nov 19, 2013

What is slightly odd is why they'd particularly care if you send them an invoice, even though formally speaking they don't need it.

Another thing that *would* ring alarm bells would be if they started issuing payments from different Paypal addresses.

I think you can also find out on Paypal if their account is "verified", meaning that they've provided identification.


[Edited at 2013-11-19 23:11 GMT]


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Nikki Scott-Despaigne  Identity Verified
Local time: 22:17
French to English
Keep yourself legal Nov 20, 2013

Your guiding principle should be that you need to make sure that you are running your business according to the rules of the system you are in. If invoices are required in Finland, then send one with the work. If the client decides to do origami with it, that's his problem.

If you wish to reassure yourself that the agency does in fact exist legally, then in most countries, there are official registers of businesses which more often than not can be consulted on the internet. They may not always be up to date, but if you can find no official trace, then it might be time to ask yourself questions.


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