Sometimes, unexpected events cause cashflow concerns for businesses.

If you have an amount owed to you that goes beyond a year, it could be considered an uncollectable account. You should review your old accounts prior to year-end and write off old amounts as Bad Debt or place them into a holding account called an Allowance for Doubtful Accounts.

A bad debt allows you to remove the revenue from the sale and reverse the HST you billed.

The Allowance for Doubtful accounts will remove the amount from your ageing list but does not completely remove it in case the client pays at some point. Eventually, it may end up as a bad debt.

One of the past negotiating tools I used if a client was struggling was to create payment terms. Sometimes, that meant reducing the amount of the billing or allowing payment plans. It was better to get something rather than nothing at all.

For example, one of my clients received no money or communication from her client even though she was sending regular payment reminders. She got on the phone with her client and suggested he send her $100 monthly until the outstanding amount was fully paid. It worked great – a few months later, the amount owed was cleared up.

Do you need a hand collecting your money from your clients? We can help!