A customer balance is a claim that should be explainable invoice by invoice. The total shown by accounting software can include genuine unpaid sales, misallocated receipts, duplicate invoices and unresolved credit notes. Before deciding that a customer is late, establish what the company can demonstrate is still due.
Export an aged receivables report and connect each amount to the customer account, original invoice and agreed payment terms. Match receipts using references, dates and amounts. Payments collected through a platform or under another trading name may require additional evidence. Review customer deposits separately from payment of completed invoices.
Ask the commercial team about disputes, returns and promises of credit. A salesperson may have agreed a reduction that never reached accounting. Conversely, a customer may dispute an invoice without the company accepting the claim. The record should show the actual status and supporting correspondence, not erase the amount merely because collection is uncomfortable.
Imagine a hypothetical maintenance SL with a customer shown as owing two invoices. One was paid together with a later invoice under a single transfer. The second relates to work the customer says was incomplete. Reallocating the receipt fixes the first balance; the other requires a commercial decision and documentation. Sending the same standard demand for both would confuse the relationship.
Once the ledger is reliable, assign an action to each overdue item: request payment, obtain proof of transfer, resolve a dispute or assess recoverability. Keep a dated collection history and identify who may approve credit notes or settlement agreements. Avoid letting informal telephone assurances become the only evidence of a material balance.
Accounting impairment and tax deductibility require their own analysis. A balance does not become a deductible loss simply because it is old, and a write-down does not necessarily end the legal claim. Preserve the evidence needed to review those questions without treating the operational collection decision as a complete tax answer.
Review progress at regular intervals and compare the ledger with any separate sales spreadsheet. Management should see the amount expected, the uncertainty and the next practical step. For help structuring a receivables review, write to info@taxdevelopmentconsulting.com with an anonymised ageing summary and the categories of unresolved balances.