Commercial Collections Blog

Inflated Account Receivables due to old, Uncollected Accounts

The key is to manage its outstanding accounts receivable.

If account receivables (A/R) is not adjusted for unpaid debts, they become artificially inflated.   If old balances aren’t depreciated or written off, you will end up with a false impression of what your A/R are really worth.

Your current A/R must accurately represent the current value of what your company is owed.  Know what’s on your A/R, and the depreciated value of each account (based on its age).

Create written standards regarding write-offs.  Before writing off a account, outsource it to a Collections Agency.  If all collection effort options are exhausted, it’s time to write-off the account.

 

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