What to Do if Client Refuses to Pay

We have been getting a lot of comments regarding this huge confusion regarding Sales Invoices and Official Receipts.

Sales Invoice vs Official Receipt

Some comments from the article about the New BIR Ruling and the Difference Between Official Receipts and Sales Invoices show us that it really is a big concern for the company and the Bureau of Internal Revenue (BIR) as well. But one of the most asked question is this one,

What do I do if my client does not want to pay me because I do not have the “right” receipt?

Before we answer that, let us go through a short summary of what documents are really needed for your business, then the next part is what you are going to do if your client still refuses to pay, assuming you have the right type of receipts.

The Right Type of Receipt

If you are selling Goods (or items), you should have a Sales Invoice (SI). If you are offering Services, you should have an Official Receipt. (OR). And it goes to follow that if you have both goods and services, you should have both types of receipts. Sounds easy, right?

But My Client Is Asking for Another Type of Receipt

If you would read the comments section on the two articles I mentioned, this is one that is often asked. So what do you do? Here are 4 steps you can do:

 

1. Write a letter

2. Print supporting documents

3. Submit the packet

4. Ask nicely

Write a Letter

First, write a letter. Put your company logo, or if you have a letterhead, print it there. Use the standard letter format with the date line, inside address, salutation, body, complimentary close, and signature line. In it, tell them the purpose of your letter and use references like what purchase order number, what order, what billing statement or whatever details. Then in another paragraph, reference them to the issuance of the BIR, which will be discussed in the next portion. Conclude by saying you want to collect the amount due to you because there is no “cause” for any delay in payment (assuming you have fulfilled your part of the agreement).

Print Supporting Documents

You can use two documents to support your claim. Again, this is under the assumption that you have the RIGHT type of receipt and that your claim is valid.

You can refer to Revenue Memorandum Order No. 3-2009 and Revenue Regulations No. 18-2012. The files were downloaded directly from the BIR website and just used here for ease. Below are some screenshots of the actual parts that you can use:

RMO 3-2009

RMO 3-2009 | Page 3, Section 113. Invoicing and Accounting Requirements.

 

RR 18-2012

RR 18-2012 | Page 2. Section 2. Definition of Terms. Item 2. Principal Receipts / Invoices.

Submit the Packet

Of course, after printing them out. All you have to do is go to your client’s office again and give them the letter and the supporting documents. Place it in a folder or an envelope and keep it neat.

Ask Nicely

Then ask nicely. Smile. It will help a lot. Tell them that you have supporting documents and that you really have the right type of receipts. Tell them that is was just a confusion. Do not make a big deal out of it.

That’s about it. We gave you the requirements and procedures for being able to claim payments. We know this works because (1) it is right, and (2) it already worked for one of our readers. She did this exactly and was able to collect. Let us know how if we were able to help you out in the comments below!

 

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One Comment

  • Kriszan F. Manipon says:

    A Company which sells goods and services issues Official Receipt for sale of goods for the reason that the transaction is non-VAT (and the basis for VAT on sale of goods is a Sales Invoice). Do they have to apply for a non-VAT sales invoice or an OR issued for sale of goods is already enough for the transaction not to be subjected to VAT? What are the implications of issuing OR for sales of goods not subject to VAT?

    Thanks in advance.

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