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Money owed to you

1. Print the detailed debtors’ aged analysis report generated by your software.
2. You should see a list of each customer’s invoices and payments, customer totals and report totals.
3. The total outstanding amount should appear at the end of the report. This should be the same as the debtors’ control account balance in the trial balance on the same date.
4. Use the report to identify poor paying customers and write them a letter. Regularly write off debt that will not be paid, to keep an accurate record of sales performance. This can be done as a journal entry. Debit sales or bad debt and VAT with the original invoice amount. Credit customer control with the gross amount. Claim the VAT in the next VAT return.
5. Some reports include a ‘customer turnover’ total. By comparing customer turnover month on month and year on year, valuable customers with increasing activity can be identified. Concentrate marketing activities for existing customers on them and get feedback as to related services that they may need.

Spot checks

1. Scan through the money owed totals and ensure they seem reasonable.
2. Compare to other documents such as statements and letters to customers. Look for duplicated invoices.
3. Agree the total money owed to the customer control account in the trial balance.

Debtors

Purchases on account

Creditors

Payments and receipts

Bank reconciliation

Depreciation

Stock held for sale and work in progress

Expenses paid in advance and in arrears

Long term loans

Trial balance

Close down

Income statement

Balance sheet

Cash Flow Statement

Requested topics

1. Collecting money owed to you

For serious debt collection issues, professional services are available. Factoring companies take on regular debt for a percentage based fee, freeing up cash tied up in debtors. The legal sector has debt collection services that issue a series of warnings and will issue a summons to appear in court. Some will also collect the fee from the debtor. Larger companies usually have a person employed to phone companies owing debt on a regular basis. Offering a manageable payment plan is one route, whilst refusing to supply further services is the final port of call. Be careful not to damage valuable customer relationships. Understanding your customer needs also applies in these situations.