Over Paid Invoice

[RicardoRMR]

Last year my company supplied a client with goods that required payment up front, after which there was a final invoice for additional services with the note of the prepayment to be deducted.

The client over paid my company in the full amount and unknown to me it was deposited into the company bank account by a secretary who has since left, so it was not noticed until now, 6 months later when the customer called to discuss the problem but there is no way I can repay them as there has been little or no turnover in the last 4 months - what should I do ?

[mystress]

I am sorry,but despite your low turnover you are holding their money;they would be quite within their rights to expect interest after all this time!

You cannot just blame it on the secretary,someone should have been keeping an eye on your accounts.

No wonder you have little or no turnover!

[Bangkok]

It depends on your relationship with your client and the prospects for your business.  It is a complex situation.  If you think there is a reasonable prospect of turnover and cash flow in future (for example, if there are orders in the pipeline or if the business is seasonal), try and agree a repayment schedule.  It is in both your interests that you have an opportunity to repay.  If the business fails (sorry, but it needs to be considered), it is likely that they will be just another creditor and get a small payout. 

Communication is key at this stage - state the case in a realistic and commercial way.

[acw]

In the interests of keeping up good relations can you offer them goods or services (not sure what your company does) free of charge to the value you owe them?  The are not obliged to accept this, but if they do you must make it clear that that is INSTEAD of the money.  I just thought that might be a cheaper way for you to make amends.  Mystress is right though - if a little blunt!

[ursula62]

You could issue them with a CREDIT NOTE to be applied against a future invoice. That way you don't have to refund them the actual cash.