You\u2019re required most likely by your local accounting policies to assess the collectability of your receivable balances. Normally it\u2019s expected you make the assessment for individual balances based on conditions and indications present.<\/p>\n
Such assessment should be made for each balance based on what you know of the client, the economic situation in general, of the client as well as factoring in the deadlines, the volumes and recent payment discipline. The easiest balances are those that are not overdue and you have no reason to think there might be a problem since the payment discipline is good, volumes are stable and so on.\u00a0<\/p>\n
However, you need to be more considerate when it comes to balances where there are indications of problems with paying in time, negotiation of longer payment terms, news reach you of problems with the client\u2019s financial performance, your competitors have difficulties getting paid etc. In each such situation a receivable balance and the whole relationship in terms of sales you\u2019re making to the client after you\u2019ve learnt the alarming information, should be carefully considered.<\/p>\n
An individual balance is written down to its recoverable amount once you\u2019ve considered all the information, the relationship, the overdue period and the likelihood of you collecting the balance. For the health of your accounting I would consider being more conservative when assessing the collectability.<\/p>\n","protected":false},"excerpt":{"rendered":"
You\u2019re required most likely by your local accounting policies to assess the collectability of your receivable balances. Normally it\u2019s expected you make the assessment for individual balances based on conditions and indications present. Such assessment should be made for each balance based on what you know of the client, the economic situation in general, of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[69],"tags":[],"class_list":["post-4851","post","type-post","status-publish","format-standard","hentry","category-1-17-accounts-receivable"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t