How long do you owe someone money for?
How long do you owe someone money for?
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Discussion

Marcellus

Original Poster:

7,210 posts

250 months

Monday 25th November 2013
quotequote all
I owe a client some money since May 2010.

Each year I've accrued it to carry over the debt so think company accounts wise I'm doing the right thing.

I have tried, and tried to get hold of the client (phone, email etc etc) to ask them for their bank details so I can transfer the funds to them with no success, so in June 2011 I sent a cheque to their address which still hasn't been cashed.

So, how long do I have to keep accruing and making allowances in the cash flow for this debt?

Devilstreak

8,088 posts

212 months

Monday 25th November 2013
quotequote all
Daft question, but is the business still trading?

Check companies house if a ltd co?

Marcellus

Original Poster:

7,210 posts

250 months

Monday 25th November 2013
quotequote all
It's a private individual we owe the money to.

Eric Mc

125,918 posts

296 months

Monday 25th November 2013
quotequote all
Why can't you just pay the money to him?

That would solve your problem instantly.


Terminator X

20,984 posts

235 months

Monday 25th November 2013
quotequote all
I'll take it thumbup

TX.

onesickpuppy

2,672 posts

188 months

Monday 25th November 2013
quotequote all
Eric Mc said:
Why can't you just pay the money to him?

That would solve your problem instantly.
He can't get hold of him for bank details and he's already sent a cheque to the last known address Eric, what more can he do?

Eric Mc

125,918 posts

296 months

Monday 25th November 2013
quotequote all
If he has sent the cheque to the supplier, then he has paid the bill and he should not be carrying forward the outstanding creditor as a liability in his balance sheet.

All he has at the moment is an outstanding bank payment. If the supplier has failed to cash the cheque, then the OP needs to amend his bank reconciliation to account for the fact that the cheque won't be processed by the bank due to it being out of date.

There is no need for him to worry about an unpaid creditor in his balance sheet. There isn't one.

The only occasion where this would be an issue would be if the amount that remained uncashed was material, in which case the adjustment to the accounts would have a material effect on the "truth and fairness" of the financial statements.

Marcellus

Original Poster:

7,210 posts

250 months

Monday 25th November 2013
quotequote all
OK, I accept what you say that yes I have written the cheque and sent it to the Client (not a supplier but a damage/utilities refund once they've left - we're a holiday company) so effectively we've paid the debt.

But as we know that the cheque now won't be honoured because it's out of date surely I've got to add it back in to the accounts as a creditor because if he crops up out of the wood work and says "oi where my money" so I pay him (as I know we owe it) then in the accounts unless I make an allowance for the outstanding debt won't it look like I've paid him twice?

In the bank reconciliation there is a line item for the amount so does that also stay there for ever, or when is reasonable to remove it?

Eric Mc

125,918 posts

296 months

Monday 25th November 2013
quotequote all
Firstly, is it a material amount?

If it is incorrectly stated will the accounts be materially misleading?

What has your accountant advised you to do?

Marcellus

Original Poster:

7,210 posts

250 months

Monday 25th November 2013
quotequote all
Eric Mc said:
Firstly, is it a material amount?

If it is incorrectly stated will the accounts be materially misleading?
No, less than £1,000, it just niggles me and I like to know what I should do and keep all my management accounts and various spread sheets in order.

Eric Mc said:
What has your accountant advised you to do?
I haven't submitted this years accounts to him yet so at this stage he won't know that it's still not been paid.


Eric Mc

125,918 posts

296 months

Monday 25th November 2013
quotequote all
I'd write it off and have done with it.

I'd just keep a memo note on file to remind you that it might be payable "properly" at some future date.

After 6 years, it it won't be due anyway due to statute of limitations.

Simpo Two

93,075 posts

296 months

Monday 25th November 2013
quotequote all
Take the win, it will help to make up for the time when the opposite happens...

Quattromaster

3,051 posts

235 months

Monday 25th November 2013
quotequote all
I'll have it, been taken for £4082 today, bless em.

mondeoman

11,430 posts

297 months

Monday 25th November 2013
quotequote all
Quattromaster said:
I'll have it, been taken for £4082 today, bless em.
Ouch!

Maz_uk

590 posts

229 months

Monday 25th November 2013
quotequote all
Put it on red! Or black!

Muffsy

141 posts

151 months

Monday 12th May 2014
quotequote all
Very Sorry to keep you waiting
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