Trade receivables Management Flashcards
1
Q
Writing off irrecoverable debts
A
Reduce profit of the business for the period and reduce the receivable balance ( asset)
2
Q
Irrecoverable (bad)debts
In Order to make this reclaim of VAT on bad debts the following conditions need to met
A
1) The debt is more than 6 months and less than four years six mouthh overdue and
2) The debt has been written off in the books and
3) The debt has not been sold to a factoring company and
4) The VAT has been paid to HMRC
3
Q
80/ 20 rule
A
80% of your business comes from 20% of the customer
