Write back old credits 2908

  • I’ve started a new company and have initiated a big clean-up of the ledgers, starting with accounts receivable.
    Through what it looks like poor house keeping the debtors has a large number of credit notes not taken by old clients and a few overpayments never returned.
    My question is, since these clients have long gone is it ok to cancel these credit notes which would obviously be benefit to my company?
    Also the same question on the old overpayments (these are all of low value)?

  • If the balances are old and not collectible or not likely to be claimed by customers, then you should write them off.
    Are you located in the US? If so, reversal of the credits not taken by customers may require you to turn over (escheat) the credits to the state you are doing business in.
    Your company should have internal policies covering how they want to deal with old balances (that would have SOX implications if you were not following policy or if A/R balances were not being reconciled).

Log in to reply