Spotlight on: Aged debts

 Thursday, 9th May 2024 14:57

With late payment ever prevalent, the issue of aged debts continues to pose a common challenge for many companies, often leading to the consideration of writing off these debts.

There are two major things to look out for in an aged debtor report: debt over agreed terms and negative balances.  For example, if your agreed terms state that invoices should be paid 30 days from the date of the invoice then anything older than this is a warning sign. Payments that are very late are particularly concerning; if your invoice is past 60 days, this is a definite red flag. The longer an invoice is unpaid, the more interest you are losing out on and the greater the chance of it becoming a bad debt.  

Here we look at the effects of writing off aged debts, the impact on businesses and how a debt recovery firm can help.


Writing off aged debts allows businesses to remove these outstanding amounts from their financial records, providing a clearer picture of the company’s true financial health. This is particularly important when preparing financial statements for compliance or reporting purposes.

Pursuing debts can be a resource-intensive process, particularly as they age. Typically, the older the debt, the more time-consuming it is to try to recover, whilst the likelihood of recovery decreases as the debt ages. Writing these older debts off can free up valuable time and resources that can be redirected towards more productive activities, such as keeping on top of current invoices, focusing on core business operations or nurturing new or existing customer relationships.


Clearly writing off aged debts means accepting that the company will not receive payment for these outstanding invoices, resulting in a direct loss of revenue. This can have a negative impact on the business’s financial performance and profitability

Writing off such debts can significantly impact a company’s cash flow, particularly for businesses with limited financial resources. Writing off aged debts can further exacerbate cash flow challenges, potentially affecting the business’s ability to meet its financial obligations or invest in growth opportunities.

Failing to pursue aged debts may signal to customers that the business is lenient or indifferent towards late payments. This could undermine trust and credibility, leading to strained relationships with valuable clients and increasing levels of late payment going forward.

How a debt recovery firm can help.

Before deciding to write off aged debts, it is sensible to evaluate the likelihood of recovering these outstanding amounts. Factors such as the financial stability of the debtor and the feasibility of collection efforts should be considered, along with the potential eligibility for bad debt relief.

Instead of writing off aged debts, it is wise to speak to a professional debt collection agency who will most often increase the likelihood of recovering the debt while also preserving customer relationships and demonstrating that your business takes late payment seriously.

The best way to avoid bad debt is to have robust credit control strategy in place before, during and after the sale.  By assessing debt recovery potential and exploring alternative solutions, businesses can make informed decisions and ensure the impact of bad debts is minimised.

At Controlaccount, we excel at recovering all types of debt, including second placement and aged debt.   We do not apply any account set up charges or contractual tie ins. Our strategies for debt collection include a no collect, no fee approach and where required, we can apply  legal requirements under Late Payment of Commercial Debts (Interest) Act 1998 and the Late Payment of Commercial Regulations Act 2013 (LPA) where applicable. This enables businesses to recover the cost of chasing overdue accounts by applying interest charges – reducing the cost of collection, and increasing the proportion of the debt you recover. 

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