Getting paid, and knowing what you will not be

Accounts receivable is two jobs. One is chasing the money. The other is admitting, in the accounts, that some of it is not coming: and most software helps with neither.

Chasing it

• A/R aging, summary and detail, on accrual or cash basis, drilling to the invoice behind any figure.
• Statements: printed, emailed, or sent as a WhatsApp message with the balance and every open document.
• A consolidated statement across contacts.
• Reminders that send themselves. Off until you switch them on, and then they chase late payers by email without anybody having to remember.
• A credit limit per customer, with a warning at the moment it would be passed: on the invoice, before it is saved, naming what they already owe and what this one takes them to. It is a note to whoever watches the money, not a rule the books enforce: the sale still goes through if it should.

Admitting what will not arrive

The allowance for doubtful debts is sized on the IFRS 9 simplified approach: and the loss rates can be derived from your own payment history rather than picked. A run adjusts the allowance to its target and books only the difference.

The aging buckets behind it are the same ones the A/R report uses, so the provision and the aging cannot disagree. Write off from the invoice itself; record a recovery if they pay after all.

One thing worth knowing

A customer who is also a supplier can be linked, so you see one firm and one net position rather than two records that have to be remembered as related.