Unpaid credits, not paid in due time, are very significant damage and a problem for the company, to be managed in an adequate and effective manner. Both in the preliminary and antecedent phase of preventing credit insolvency, to avoid finding oneself in unsuitable situations. Because “prevention is better than cure”, as popular wisdom teaches. Both in the phase – subsequent and possible – of the effective management of outstanding receivables. Because “the accounts must come together”, as every manager and entrepreneur struggling with the fate of the company knows well.
Moreover, problems of unpaid credits directly concern not only the company coffers but also the activity of directors, managers, and entrepreneurs, who must have diligent and effective management of the company, to avoid liability actions by other shareholders or bearers of interest. If the accounts do not add up, they are called to answer.
Unpaid receivables: damage that companies have to deal with in the best possible way
In the current economic situation, and probably even more so for what will be the negative effects of the Coronavirus, unfortunately, companies are increasingly finding themselves faced with all the complex problems relating to credit management in a timely and competent manner. unpaid. With the considerable expenditure of economic resources, both internal and external to the company.
The damage that derives from an unresolved credit Score for the company, in fact, consists not only of the immediate loss of money, relating to the non-collection but also of all the additional and consequent substantial financial charges, which concern the administrative management of recovery of the unpaid credits.
Today, to face and solve these situations, not only adequate and specific skills are needed, but a fundamental activity and contribution can come from new technologies. With specific systems and application solutions.
New technologies offer new suitable and specific solutions
The granting of credit to customers is often used by companies for two different purposes: to encourage sales in order to expand them, and therefore increase revenues; to be preferred over the competition. But all of this can increase the risk of bad debts and credit losses occurring.
First of all, when it comes to opening a credit – in any form, from commercial supply to other activities and services – against another subject, one of the most important parameters to be assessed is the solvency of the customer and the counterparty. It is important to carry out a careful analysis to assess its solvency and to understand if it is a subject at risk of insolvency.
This analysis can be requested from your bank, which will carry out the necessary checks, but in an even more effective and efficient, and personalized way, it can be carried out through special software and artificial intelligence application solutions. In order to inform yourself correctly and in the most detailed way possible.
Then, once the credit has been granted, or once there is a non-payment, in cases where the customer and debtor are temporarily unable to pay by the due date, the company can grant a total or partial renewal of the credit, with a repayment plan. Also by charging the interest and any expenses incurred for the recovery of the amount due. And here too Hi-tech systems of analysis, calculation, and management of unpaid credits come into play.
Unpaid credits: always evaluate the relationship between costs and benefits
In cases where the customer’s difficulty and default are not only temporary, however, how is it best to move in these situations? The rule that always applies, first of all, is that it is necessary to make an assessment between costs and benefits. Supported by adequate processing and analysis tools.
It may then be advisable to contact professionals, consultants, or lawyers, to start the recovery, especially in the case of large sums. Just think, for example, of companies that would end up being exposed to high risks in the event of non-collection of their receivables.
From a strict accounting point of view, then, it may be useful to distinguish receivables that have already expired and whose recovery is doubtful, from other receivables from customers. Overdue receivables can be reversed from the Accounts Receivable account and brought to the Unpaid Loans, Doubtful Loans, or Non-Performing Loans account. Specific calculation and administrative management systems help to do this too. If the company has an outstanding credit whose collection is impossible, this credit can be written off, ie eliminated, from the ordinary accounting. But in the end ‘the accounts don’t add up, and the problem remains. It had to be dealt with better and resolved first and in another way. And new technologies offer new solutions for this too.