Clearning old items - The Book-keepers Forum (UK)

debzinkent · Veteran Member

Clearning old items

BudgetB · Guru

You can't really just code them out as they may not have been paid, or even existed! They could be duplicates or errors. Probably best to get a history statement from each of the suppliers so you can go through and reconcile what you have on Sage against what actually happened and see what you come up with.

It may be that some of the changes/errors relate to a previous year which has been closed off, in which case speak to the accountant before you do anything that could affect finalised figures. It may also be that the accountant has cleared them out by journal when he's done the year end but no-one has ever put the journal through on Sage so you should check that also.

Shamus · Forum Moderator & Expert

Hi Debbie,

you can't assume that because a debt is not being chased that it has been paid. Quite often this points to poor credit control rather than poor bookkeeping.

You state that there is no way of checking them but what about unallocated comparable amounts from prior period bank statements?

Maybe you should be looking at setting up a Dunning account and transfer the aged debtors to there pending a full investigation for each entry into either clearing or chasing it dependant on the actual payment status.

A credit note would only be for where the debt is being written off and as bookkeepers it is not our position to make that decision.

Does the company that you are working for have a credit control function? If so you really need to be liaising closely with them about this. If not then speak with management about specific written authority to write off immaterial debts below a certain limit otherwise you will spend all of you time chasing debts for a few pounds that will cost more to chase than the return the company gets.

Material debts all need to be resolved properly regardless of their age.

hope that this helps,

kind regards.

Shaun.

Shamus · Forum Moderator & Expert

Hi Jenny,

sorry, you must have answered just as I read it. Think that we're pretty much both of a mind though that one cannot simply write these debts off.

I'm suspecting that poor old Debbie may find on raising this with the management that she is the credit control department in which case this is going to end up as a lot bigger job for her than she may have originally thought!!!

debzinkent · Veteran Member

All the payments / invoices are from previous years, so there's a good chance that y/e journals have been done, so should I just leave the accounts as they are, i.e. with the outstanding items?

debzinkent · Veteran Member

The invoices (and there are some outstanding payments) date back as far as 2007/2008. I'm really not sure what to do.

Shamus · Forum Moderator & Expert

That to my mind is probably the best option.

As mentioned above certainly don't raise credit notes or clear aged debts by other means without specific authorisation to do so.

Shamus · Forum Moderator & Expert

Oops, my responses are getting out of sync (must type faster!).

It sounds as though the entities management are imposing on you more than they should. The aged debts are their responsibility. Your's is recording the transactions.

As this goes back two or three sets of accounts then these have obviously gone past the accountant in the past (more than once). Is there any indication that provision has been made to write off these items?

What do management say about these debts either singly or aggregated? Do they know or even care about them? Do the management know how the accountant treated them at the last reporting date?

As mentioned above, the approach of leaving these items outstanding may, in the absence of a better sollution, be the best short term option but you should record that you have brought these items to the attention of management.

debzinkent · Veteran Member

I mentioned them to the Accountant that will be doing the final accounts and she just said that it would be better if they were cleared.

The management aren't interested.

The journals from past years aren't very explanatory, I guess because they knew what they were for and didn't care about anyone else knowing!!

I'll just leave them all outstanding, I don't think I'll be doing this for much longer so I'll just leave it for the next person!!

Thanks all :)

Stardoe · Guru

I've been in this situation a few times (including one present client) and it is very frustrating. You just want to tidy up the accounts, the accountant wants them tidied up and the management doesn't care (although they should do). Fortunately in present client's case he did care and was actually quite helpful with some answers.

If there are no relevant matching payments on the bank statements (assuming you can go back that far) would they have been paid by cash or by directors' own funds? In the absence of management's interest I would be inclined to agree with Shaun and leave them as outstanding. Let the accountant know that they should be cleared off and have a written record (email or written note) that you have told management.

Pauline

debzinkent · Veteran Member

What about invoices that appear on a statement sent in January of this year but are actually dated going back as far as 2005. If I am able to get copies can I still reclaim the VAT at whatever rate it was back then!?

debzinkent · Veteran Member

Sorry, another question regarding these invoices. I would think I have to date them the first day of the new financial year but would I still code them to the same code (they were for past accountancy invoices), as this will make the records incorrect by saying that the company has had all these accountancy costs when actually they were from previous years. I'm really not sure what to do with them.

attilabenko · Guru

Well, they should have been included in those years books. I don't think you can just change the date of an invoice. Are you sure they were not in your company's supplier accounts? About statements, are there no payments on the statements? I did deal with companies who are not showing payments made on the accounts and I had to ask them as there were actually payments made.
The company accountant really should give you advice about what is going on with these.
Also just because it is on a statement you cannot reclaim VAT, you DO need a VAT invoice and there are specific rules depending on the amount and there is time limits, I think it is four years. Be careful, a statement is nothing in terms of record keeping apart from it is a helpful tool. Entering transactions from statements is a fairly common but bad practice.

debzinkent · Veteran Member

The company that have looked after the books in the past were (as I'm finding out) pretty crap. All they did was enter any invoices they had, enter any payments, do VAT returns and year end stuff. No housekeeping at all. Consequently, when I took over the supplier accounts were a complete pigs ear.

The company has been paying this particular supplier by DD for a couple of years, a regular amount of £500 per month, hence it currently shows £8500 worth of unallocated payments. I contacted the company which is how come I have the statement, so I was going to see if they could send me copies of the invoices that we don't have on the purchase ledger. But as they are such old invoices, even if they can send me them I don't know what I would be able to do with them as far as coding and VAT goes. By the way, I wouldn't reclaim the VAT just from the statement as they are quite high value invoices.

attilabenko · Guru

If they are high value invoices, definietly ask the accountant's advice! Also ideally you should have those invoices (paper) somewhere as you meant to keep them for 6 yrs, ok maybe an invoice goes missing but lots of them? Ok just realised the 2005 bit. That is six years. You will probably struggle to get invoices for those and also you cannot claim VAT back on them.

debzinkent · Veteran Member

I'll give it a try but our Accountant isn't that great either! This forum has been more use in the past!!

Thank you for your help.