Chapter 14
Dealing with Bad Checks and Other Rough Spots
In This Chapter
Reacting when checks don’t clear the bank
Tackling the challenges of MIA customers
Collecting from customers who are no longer in business
Considering when to write off a debt
Your company has attracted what you thought was going to be an excellent customer base. Although you know from your college accounting text that your accounts receivable turn over every 30 days, your real life experience is different. When you try to collect from your customers, stumbling blocks appear in your path. These obstacles may include:
Bad checks: Customer checks can cause calamities (no, these aren’t the five Cs of collection). You’ll inevitably encounter situations where customer checks fail to clear the bank.
Out-of-business debtors: Your customer goes out of business and has no apparent assets or other means to repay you.
Disappearing debtors: Some debtors disappear, and you discover how capable you are at locating people who don’t want to be found.
Bankruptcy and receivership: Some debtors obtain court orders commanding that you stop your collection efforts, or they file bankruptcy.
Countersuits: When you sue to enforce your collection claims, your debtor files a countersuit.
During good economic times, sales are plentiful, profits are high, and collection seems easy. But difficult economic conditions create rough spots in the collection path. You provided your customers with your best goods and services, but now some ...
