Now and again I find it necessary to discuss receivables and their possible impairment. It’s not a question of if this should be done in my eyes, but when. However, let’s discuss both, the ‘if’ and the ‘when’.  

Accounts receivables are assets on your balance sheet and as it happens, assets tend to be more prone for losing their value. Either it’s through them being damaged, no longer usable or simply there not being a market anymore for them. The same could be said for receivables. It’s possible that they may no longer be ‘usable’ in not a direct meaning of the word, but figurative sense. A receivable is something you ought to receive from someone else, but what if this ‘someone’ isn’t able to give anything to you. So there’s the reason you ought to assess receivables value, whether they’re recoverable or not.

Now the question of when this should be done. Accounting standards refer to the words ‘regular’ meaning that the assessment should be happening frequently. I would suggest reviewing your balances that are overdue for a reasonable interval factoring also in your need for cash to maintain your business. If there are significant unpaid balances that are overdue, there’s an indication that they may not be recoverable or the client is managing their cash flows in the way that they only pay when you ask. This, however, causes you problems. I would consider reviewing your overdue receivables at least once a month, but why not more often.