April – Can account reflection and financial change improve your bank balance.

For many, April brings the new financial year. A time for looking back, analysing accounts, learning from them and planning a route forward.

Sadly one negative account tasks is to determine the invoices that are to be written off.

People can give many reasons for writing off an invoice : It’s too much work to pursue them, it’s not cost effective or quite possibly, I simply don’t know how to go about it !

In actuality, there should only be two legitimate reasons for writing off an invoice : A customer insolvency or a legitimate dispute on items.

Should you suffer a customer insolvency, then sometimes there’s very little anybody can do. Companies go bust daily, often with little warning and the numbers continue to rise. But what can you learn from an insolvency ?

If the insolvent company owed you monies within the last 30 / 60 days, you’ve probably done all you could to chase your monies. Sadly this is a cost of running a successful business, you’re going to encounter such challenges more and more as you get busier and busier. However if your debt ran beyond 60 days, ask yourself… ‘Should I have passed this on quicker (Yes), was there a chance of getting paid prior to the insolvency (Probably).

Should your write offs include disputed goods or items, ask yourself… ‘Could we have done something better to secure our money ?’

Disputes, queries and errors are part and parcel of everyday business but did you know it is unlawful to withhold the payment of either a different invoice, or an undisputed portion of an invoice, in relation to a separate query. If only some element of your invoice is queried, you have a legal right to demand the remainder be paid, it just takes the skills and knowledge to know how to secure your payment whilst maintaining that valuable client relationship.

Did you know you have SIX years to pursue your accounts. Even if you’ve recorded them as write offs in your annual accounts, you can continue to pursue them, you simply have to let Mrs Reeves know if you get paid back your hard earned monies.

If you find you have lots of ‘standard’ write offs, where there’s no real reason for not pursuing them other than it’s been a long time since you did, or you don’t know how to, now’s the time to act.

Let’s not forget, your invoices represent not only the cost you’ve incurred in completing the project but also your profit. Make no bones about it, if you continue to allow debts to simply be written off, you will not only continue to lose the money that you’ve invested in the project but you’ll also be losing the profits that you could have invested into your business.

So what can you do about it ? Simple, don’t just accept it, take action to recover it. It’s not too late !