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My anecdata is that I'm a contractor and customers regularly pay late, except in December. I have one customer who was 3 months late on payments at one point t
by Consultant32452 3y ago
My anecdata is that I'm a contractor and customers regularly pay late, except in December.
I have one customer who was 3 months late on payments at one point this year. Then in December they paid up for what they would normally have owed in January a month early to stick me with the tax bill.
Every contractor I've ever talked to has similar stories and worse.
- Scoundreller 3y agoI guess this is a fundamental different between accrual vs cash accounting. In accrual accounting, you would book the revenue when the service is provided and delaying/advancing a payment shouldn’t change the fiscal year it falls under. In Canada, most of the time you’re required to follow accrual accounting. I guess if you have the choice and expect routine delays to payments, cash accounting is the way to go.
- borissk 3y agoAnd what if you do the work and never get payed? Sounds stupid to pay taxes over income one hasn't actually received.
- Scoundreller 3y agoYou have allowances for doubtful accounts and/or bad debts. Also sounds stupid to game taxes by delaying/advancing payments.
- op00to 3y agoDo American customers pay later than Canadians? Mexican? Russians?
- Consultant32452 3y agoI only work in the states, but I've had customers who were owned abroad. Basically the same behavior. I'll add one note I forgot in my OP. The bigger, richer customers are more notorious for paying late. I wouldn't say I avoid the fortune 500 type companies, but I don't go after them.
- op00to 3y agoI work for a large company and see other large companies (based in Europe, or North America, or Asia) that are 6+ months and tens millions of dollars in arrears to where I work. It seems like the rules are different when you owe a lot!