how to deal with 'cash' customers

the_pen_turner

im a carpenter
most of my jobs are small , only a few days to a week .
usually the invoice amount is small . usually 300-1000euro
I am vat registered

I am often asked how much for cash.
I run my business as straight as possible and everything goes through the books.

I would guess that 1 in 4 customers want a 'cash' price and no vat.

if I know someone will only want to pay the ex vat price I will tell them the 'cash' price at the inc vat price. then do an invoice later for my own records.


is this legal . can I get in trouble by doing this


how do you deal with the 'cash' customer

jimmii

Fair play to you for doing it all above board I can imagine it's not always the case with others. What is your concern? Are you worried one of them might report you for not charging vat one day (only for the revenue to quickly work out you are!)?

You're making them think they got a good deal but also doing the right thing by the revenue as well. I guess the only issue would be that either you're not issuing a receipt at all or that it would be an incorrect receipt but I am guessing it's the former.

Do these customers accept a price beforehand then look for a cash price after the work is finished or is it normally a case of not being able to give a very accurate estimate beforehand?

meforever

I previously worked in this sector and was always tax compliant. Any other way will get you in trouble. My accountant devised a simple system that worked. A non traditional quotation but all legal... Note...This quotation book was used for homeowners only. The standard quotation A4 ( formal with everything except the VAT column ) would be presented in a sealed envelope in person. Always best if you ask them to give a quick call or text and that you are late for an appointment. You never want it opened in front of you. There would be a PS line at the bottom stating;- inclusive of all taxes in a bigger fond size BUT not in bold. Once you start explaining you're opening the discount topic. Home owners love round figures ( nearest 20 Euro ). Keep in mind always that you're USP is" you "and not your price.

Wishing you luck.

George

VincePP

Tell them that you cant, but that its also for their protection.

1 - They have a record of the work done and who did it.

2 - They can possibly claim the home improvement grant which effectively refunds them the vat.

3 - If you get an inspecyion you will need to show where products you buy are used.

4 - vat is only 13.5%, so it not a huge advantage

Of course every tradesman can get away with the odd non vat job, but those doing it regularly run the risk of being caught and getting landed with mega fine.

the_pen_turner

jimmii wrote: »

Fair play to you for doing it all above board I can imagine it's not always the case with others. What is your concern? Are you worried one of them might report you for not charging vat one day (only for the revenue to quickly work out you are!)? yes. they would see that you are compliant but it would also put you on the radar for an audit .

You're making them think they got a good deal but also doing the right thing by the revenue as well. I guess the only issue would be that either you're not issuing a receipt at all or that it would be an incorrect receipt but I am guessing it's the former.I think you only have to give a receipt if they want one . so I presume if they don't want one then I don't give it

Do these customers accept a price beforehand then look for a cash price after the work is finished or is it normally a case of not being able to give a very accurate estimate beforehand?in that case the price is the price. you agreed to it so pay up

...

jimmii

Just so it's easier to follow!

Fair play to you for doing it all above board I can imagine it's not always the case with others. What is your concern? Are you worried one of them might report you for not charging vat one day (only for the revenue to quickly work out you are!)?

yes. they would see that you are compliant but it would also put you on the radar for an audit .

You're making them think they got a good deal but also doing the right thing by the revenue as well. I guess the only issue would be that either you're not issuing a receipt at all or that it would be an incorrect receipt but I am guessing it's the former

I think you only have to give a receipt if they want one . so I presume if they don't want one then I don't give it

Do these customers accept a price beforehand then look for a cash price after the work is finished or is it normally a case of not being able to give a very accurate estimate beforehand

in that case the price is the price. you agreed to it so pay up

jimmii

in that case the price is the price. you agreed to it so pay up

So sometimes you quote and sometimes you don't? And when you don't you assume some people will look for a cash price and quite them a cash price including vat would that be correct?

the_pen_turner

jimmii wrote: »

So sometimes you quote and sometimes you don't? And when you don't you assume some people will look for a cash price and quite them a cash price including vat would that be correct?

what I usually do is ask if they want a receipt when im adding up the bill. if they say yes then I give them the invoice inc vat

if they say no I tell them the inc vat price .

the only possible problem is if they change their minds and want a receipt . I then have to add vat . its ok because its just a bit of profit

jimmii

the_pen_turner wrote: »

what I usually do is ask if they want a receipt when im adding up the bill. if they say yes then I give them the invoice inc vat

if they say no I tell them the inc vat price .

the only possible problem is if they change their minds and want a receipt . I then have to add vat . its ok because its just a bit of profit

Why do you give them the option? Could you not just give them the invoice with vat without giving them the choice?

sconhome

Why not save yourself the complications when providing either a quotation or receipt. You are dealing with private homeowners in the main so the VAT is not a major issue for them.

By highlighting the VAT on a bottom line as you would for commercical clients you open yourself to negotiation and what's you're cash price which of course they are not looking for the VAT free price, they want lower.

I would simply state the inclusive price and clearly indicate your business registration details and a line stating that "all prices are inclusive of all taxes, insurance & compliance costs." A bit flowery but it distracts from VAT & "sticking it to the system" but also showing there is more to a price than just 'cash' & VAT. If you are ever asked for a VAT receipt you simply show the total inclusive of 13.5% and write it into the docket (after you are paid!) or email a breakdown if it is a cheque once it is cleared.

antoinolachtnai

It could be that 'cash' customers mean that they want to pay straight-up, with no credit cards. It isn't just about VAT. This is a good thing for your business too.

For these customers, (and maybe for all non VAT-registered customers) I just wouldn't say anything about VAT. Just give them a straight up price that factors in your VAT, but don't mention VAT.

99 percent of retailers operate this way. There is no reason you can't do it too.

buck65

No, cash is definitely about tax avoidance, as a supplier I get it all the time, best price for cash etc. - if I brought in pound notes...no invoice needed... etc. I always answer, cash or card makes no difference to me I have to invoice it.
Ireland 20 or even 10 years ago was a different place to now! Everything including wages were cash. No longer thank God.

antoinolachtnai

That may be so, but just don't entertain the thought!

Just assume that when they say cash they mean 'payment up front', and not on a credit card.

(The odd time I am in McDonalds, I sometimes ask the order-taker for her 'best price for cash', just for fun. It sometimes gets a laugh ...)

oceanman

A few of my friends are self employed, painters, landscaping, motor trade ect. heres how most of them do it. check or card goes through the books with a receipt given.. cash in hand gets a 20% discount and goes straight into their back pocket..

drunkmonkey

oceanman wrote: »

A few of my friends are self employed, painters, landscaping, motor trade ect. heres how most of them do it. check or card goes through the books with a receipt given.. cash in hand gets a 20% discount and goes straight into their back pocket..

And all you need to do is make that mistake once to the wrong person or get reported for doing it and you'll be screwed by the revenue, it's not worth the risk.

When your dealing with consumers the price is the price, forget about giving off the vat, it is of no concern to them, they are not vat registered, they have no business asking for the vat off nor should they be given it, the price is the price, everything else in their lives includes vat.
They don't go into centra and look for the vat off the milk.
The cash price is what ever discount you want to give off but as your vat registered you must charge vat.
Your cash price is always including vat. You only quote ex vat when dealing with a vat registered business.

oceanman

drunkmonkey wrote: »

And all you need to do is make that mistake once to the wrong person or get reported for doing it and you'll be screwed by the revenue, it's not worth the risk.





you may be right, but its very unlikely that someone who is getting a good cash discount is going to report you...

jimmii

oceanman wrote: »

A few of my friends are self employed, painters, landscaping, motor trade ect. heres how most of them do it. check or card goes through the books with a receipt given.. cash in hand gets a 20% discount and goes straight into their back pocket..

And that's exactly what OP doesn't want to do and exactly the reason why he is having trouble with it. When we first moved to Ireland one of the tradesmen did this and 6 months later he had been caught and was having to ring all the customers asking them to pay the VAT he hadn't charged and a person I did business with cropped up on a Google search I did because they got a €25k fine for fiddling the VAT. They do catch people and when they do they do they can hammer you.