Talking Cents

A guide to understanding your accounts receivable, by our small business accountants in Southbank

The accounts receivable process includes many elements such as sending invoices, waiting for payment, chasing up payment and matching payments to invoices. Our small business accountants in Southbank are going to explain what happens when your accounts receivables are not paid on time.

When an invoice hasn’t been paid by its due date, you have to begin ageing the invoice. This is done by just counting how many days have passed since the invoice was due. Our small business accountants in Melbourne recommend you put all past-due invoices in an ageing report, from least overdue to most overdue. As an invoice ages, the less likely it is going to be paid, therefore you must decide on what steps need to be taken to recover debts.

When invoices are overdue and unlikely to be paid, our Melbourne small business accountants deem them as bad debts. By writing off the invoice as a bad debt, you can claim the tax back that may have already been paid on the invoice. However, even after you’ve written off the debt, keep sending invoice reminders through email.

In conclusion, it is important to set up an accounts receivable process as it can maximise your chance of getting an on-time payment.

For more information regarding your business accounts, please contact our small business accountants in Southbank today.