Countdown to tax time: 7 weeks from June 30 – review your debtors
This is a great time of the year to review what monies are owed to you – remember you are not in the business of lending money!
Often it is the enticement of an end of year tax deduction that lures customers into paying you, so don’t be afraid to dangle this carrot when requesting payment.
To start with, you need to make sure that who your accounting software says owes you money, does actually owe you money.
You can start by printing out a Debtors report.
In MYOB AccountRight, go into Reports, select Sales, and then select the Receivables Reconciliation (summary) Report either as at 30 April 2016, or the current date depending on how up to date your file is.
What you are looking for is that only the customers that still owe you money is on this list and after you review that is exactly what this list will say.
Review the Receivables Reconciliation list especially the 31-60, 61-90 and 90+ day columns for accuracy and correct for the following anomalies:
- Customers may have paid, however the payment hasn’t been allocated against their sales account and will need to be corrected.
- The customer is simply not going to pay and the debt will need to be written off.
- The customer will pay but you haven’t been successful in obtaining the money off them. There is no action that needs to be taken in your software however you should try and get this money in before 31 March. No action is required in your software.
The information provided here is of a general nature for Australians and should not be your only source of information. Please consult an experienced and registered tax agent as each small business’s circumstance will vary.