Who’s Your Client?

Often, when you are in business, a customer asks you to make the invoice out to a party who is not necessarily the customer.  There are all sorts of reasons for this, some that are legitimate and some that aren’t so legitimate.  Should you do it?  Maybe.  (Don’t you love it when a lawyer gives you such a definite answer?)

(First things first: Is it really a problem?  Who is your customer?  Is John Smith your customer or is it a company owned by him?  If the party that is asking to be billed is actually the customer, then there is no problem.)

Generally, if there are no possible consequences to you, I would say “Why not?”  What consequences could there be?

There may be financial consequences.  Protect your wallet.  Have you been paid for the work?  I recall a story told by a partner in the first firm I worked in.  Way back, a client asked that the firm bill the guy’s corporation.  They agreed.  He never paid his bill and taunted them that they could sue the company because it had no assets.  Lesson learned.  I would not entertain any request to bill some other entity unless you had already been paid for the work.  (You don’t really care who pays you, as long as the cheque is not rubberized.)

(Of course, if the company (which may have no assets) is actually your customer, you may want to get a personal guarantee from the principal before you agree to extend credit or work without a retainer.)

Secondly, are there legal consequences?  Even if the party will pay you in advance, you have to protect your rear.  Is there any risk of liability?  For example, if you install interlocking brick at a guy’s house and he asks you to bill his company, you may well be knowingly assisting him in tax evasion.  If he wants to try to claim the expense, let him try, but don’t knowingly help him.  Make him explain to RevCan why his retail store is paying for interlock at his house, as opposed to you having to explain why you billed someone other than your customer.

That’s what I mean by no consequences to you.  If you are not knowingly helping someone do something wrong, then you will not likely be saddled with any liability.  (For those loophole-seekers out there, turning a blind eye and ignoring the obvious are generally the same thing as knowingly helping.)

Finally, whatever name you put on your invoice, make sure it is the proper name of the customer.  Don’t put “Bill Plummer” or “Plummer Plumbing” if it is “Bill Plummer Plumbing Inc.”  That’s especially important if Bill has another company called “Bill Plummer Plumbing and Heating Inc.” 

In summary, figure out who your client is and put the correct name on your bills/contracts/quotes.  If you decide to invoice another party, make sure that you have been paid and that you will not expose yourself to liability by doing so.