I’m looking to see how other people deal with owed money. I have a situation at the moment where a client owes me a small amount (around £50-60), which has been outstanding for 2 months. I’ve emailed them (via the reminders) and phoned them (and they said they’d phone back, but don’t).
I know it’s only a small amount, but as a small business, every penny counts - as lots of you can probably relate to. Thankfully, I’ve never been in this situation, so don’t really know where to go.
So, how do you deal with owed money in your business?
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When a debt is found to be bad, the asset (i.e. the sale) as shown in the debtor’s account is worthless and must be eliminated as an asset account. You do this by crediting the debtor’s account and debiting the expense account (the bad debts account). At the end of a particluar period, any balances in the bad debts account should be transferred to the profit and loss account. This is because a bad debt has to be classed as normal business expense. You say you have waited for 2 months now, but I guess you will have to decide at what point you deem it to be bad.
Bigger businesses will have a system in place to enable them to make provision for bad debts and there are several methods to account for this. Probably (and hopefully!) not appropriate for your self though.
Hope this helps you.
I think that the OP is as much concerned with getting the money as with the mechanics of writing it off.
Gardenman has covered the latter and for a debt that small the effort involved in going through the small claims court would cost more than the debt. Of course your customer may be counting on that. Its probably worth sending a written demand by recorded delivery, that would be a pre-requisite to taking a legal route so may worry them enough to reach for the cheque book.
Make sure that you flag the account so that you don’t do any more business with them. I have had a similar client and, in the absence of a credit limit function in Quickfile, I have simply added “XXX” to the name.
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Hi Parker1090, I usually find the std letters do the trick, i.e. Reminder 1’ 2 and then final letter, send them 7 days between each other, I would be happy to let you have my standard templates if you have an email address
Rob
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Thanks All.
@gardenman_2803 - I’m hoping it doesn’t come to writing the debt off, but if it does, I’ll re-read your post. Cheers.
@FolkLondon - I’ve flagged that account! I don’t particularly want to go down the legal route. If I’m honest, I don’t want the hassle.
@Rob - I’ve sent you a PM about your letters 
. Thank you
From my experience where letters don’t work, I have written off small amounts that end up costing you more time chasing. On anything over £500 where I have a chance of recovery and the letters and calls have had no effect I have used the small claims court which normally triggers a very prompt payment! A pain to do but in the end it can take less time than chasing the client directly if they have no decency to respond to you. The possibility of a CCJ against any company normally gets prompt attention.
It all depends how much you want to keep the customer - but chances are you don’t need that kind of customer!
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