My company carry out a service for the customer who is invoiced and the client therefore pays that invoice. The stock sits with myself of which they pay storage for and have asked me to sell the stock @ 10% commission on sales.
If i therefore sell some of the stock, eg 10 items @ £30 / each, i invoice the purchaser for this who in turn pays the invoice.
However, the storage from the client is less each month than the sales. I have now collected the money for the 10 items @ £30/each but must pay the client the 10 items @ £27 for me to retain the commission of £3/each for the 10 items.
Do I;
Raise a purchase invoice from the client as if i have purchased the items at £27 / each ?
Do i need to ask the client to send me an invoice each time or per month, even though this seems long winded or how am i best to do this please and also show it ?
Someone told me about self billing but is this scenario where i need to do this, how do i set it up and also account for it please ?
What is the fastest and easiest way to do this please ?
Hi,
Can I just clarify please? You hold the stock and sell it on behalf of your client? They pay you for the storage and also £3 commission per item? Does the client buy the stock and send it to you when you need to re-stock?
Are you and/or the client VAT-registered?
Are you selling online or in person? If online, is it just in the UK or overseas?
Thanks
Claire
Thanks for your reply. We are the custodians of their stock and charge them a storage charge. Sometimes they sell stock and we do it get any commission and sometimes we sell the stock for 10% commission.
So for example if a customer asked us for a product and we had access to it, we would sell it.
We sell for £30
We would retain £3
And £27 would need to be transferred to the client.
We are vat registered and the majority of the clients are but occasionally we may have a client that isn’t.
We currently only deal with clients in the U.K. but are looking to expand to overseas.
Alternatively, you could send your suppliers a report each month of how many sales you have made and ask them to invoice you at £27 each. They can then account for the VAT, depending on whether they are VAT-registered or not. In return, you also invoice them for the storage including VAT.
Basically, I see it as you buy an item for £27 and sell it for £30, surly the most simple is to purchase order for the items, which they invoice you for items x £27 each and your sells, you invoice to your buyers at £30.
You mention storage charge, but don’t state how much, you could invoice them once per month for this.
You’re not drop shipping, as you pay for the items, and not only get the commission. You are receiving the £30 per item, which counts towards your turnover.
I assume though, that the £27 per item is only paid over on sale of said item and the stock remains the property of the client until sold? So @Scawfell is not buying the stock merely looking after it and shipping it.
They are buying the stock, just not in one hit, but as a sell or return. As quoted below.
They receive the £30 per item, then pay the £27. All that is different here is, instead of buying say 100 items in bulk in one hit, the supplier is basically easing the cash flow, and only requiring payment on sold goods.
If the £30 was going directly to the supplier, then commission of £3 per item would only be charged, received by @Scawfell hence then not buying the goods.
Just work to the most easiest for you, and don’t over complicate things.
You can’t necessarily just do the easiest thing. If @Scawfell is acting as an agent then there are certain procedures that must be followed for VAT purposes. I think the best thing for @Scawfell to do is to check the VAT guide, section 22, which deals with supplies made by or through agents.