What does the end of the tax year mean for businesses that are still owed money from their clients?
If balances are not recoverable then these amounts will need to be written off as an expense to the profit and loss account.
If balances are not chased on a timely basis, this may reduce the probability of recovery and result in an inflated profit figure and potential cash flow issues.
The identification of inaccurate or unrecoverable balances by the external auditors may lead to debts being written off or the provision of bad debts; both of which will reduce the organisation’s profits.
But it doesn’t have to end up this way, there is hope; collection agencies like CPA will help to recover outstanding amounts using experienced and proven techniques whilst acting as a team member of your business.
Should businesses take extra measures to ensure all invoices are paid in the run up to the end of the year?
Yes of course. Once again it comes to having excellent credit control procedures in place.
Start preparing now if you have accounts that are looking like they will not be paid take action.
Organisations may have a dedicated credit control manager or team, however smaller companies and sole traders will not have this available to them. At the end of the month, credit control will be done in a panic by someone who is likely inexperienced. My advice would be to get someone else to do it for you. There are companies that you can outsource your credit control to that will be experts in their field. Their primary objective is to ensure that cash is received from the customer within the organization’s credit terms, which are in the form a pre-determined number of days (e.g. 30 days from the invoice date).
Credit terms are set using a formal assessment of the customer’s ability to pay based upon their credit score and references. It is vital that these checks are carried out prior to giving credit.
There’s still time for you to have another go at getting those clients to pay up. Follow CPA for more tips and tricks on how to ensure your clients pay up.