Due to the natural forces of demand and supply, the will never be a time that everyone will have enough money to accomplish and fulfill all his needs. The same applies to companies. As a general rule company sells and buys on credit basis. The supplier of a company supply their commodities, but the payment is made on a future date. Sometimes a company may not honor the payment of dues to its creditors. The international accounting standards advocate that every accounting entity operating on credit basis should make a provision for doubtful debts. The set 10 as the maximum provision on the total receivable. These are some of the steps one should take when recovering bad debts.
Maintain good accounting records
The first step is to maintain good accounting records. It is a statutory requirement that every company should maintain updated books of account. Every transaction that involves cash, either to be paid on the transaction or to be paid in future, should be recorded and evidence of transaction stored. The same idea should be borrowed to personal business and other forms of business. When one is a salesperson of a company, one should ensure that every transaction with the company is recorded by the statutory laws. In case of a petition, one is required to produce the records as proof of transaction. In addition to this, keeping good books of accounts help the person claim tax allowances. Provision for doubtful debts is an allowable expense. It is not taxed. In order one to claim this allowance, one should have a full record of all the receivable. One should hire an accountant for periodic renewal of the account records and necessary recommendations.
Understand the terms and condition of the agreement
The second step is to understand the terms and condition which you were engaged under. What were the terms of payments? Understand what specific time you were supposed to be paid and the amount of money expected to receive. What did the agreement say about a breach of the contract? Understanding the terms gives you a chance to ask for more competition. The company should pay more for breaching your contract. The company should pay all the legal wages. After understanding the terms ascertain that you have not broken any term of the contract. Notify the company that the breach of the contract.
Seek legal intervention
The last thing is to seek legal intervention from the state and the concerned authority. As a professional norm, one should not file a case in the court before notifying the management of the company. Sometimes the delay in payment can be a result of mix up in their system. If the delay is caused by a breakdown of the system in the company, one can give the company more time to resolve the issue. It will deepen the relationship between the company and the client. However, if the company is not willing to take up the matter as a matter of urgency, sue them in a court of law. This was one of the ways that lularoe app used.