Managing doubtful customers

When a company's closing date is approaching, it is recommended to carry out accounting inventory works. One of the tasks to perform consists in assessing the inventory value of items, such as customers receivables resulting from recovery difficulties.

The company can decide to first mark the receivable as doubtful, then issue an accounting provision.

As a reminder, doubtful receivables are established receivables (known to the debtor) that a company has against customers of doubtful solvency or towards conflicting customers.

Doubtful receivables refer to the amount of debts which a company may fail to recover due to customers insolvency or conflicting invoices at the end of an accounting period.

For insolvent customers, the conflicting invoice(s) will no longer be paid; the receivable is therefore considered as irrecoverable.

Note

Before a debt is considered as irrecoverable, the customer must first be marked as doubtful. You cannot directly mark a customer's debt as irrecoverable.