Bad Debt Management

Anglo-Spanish Chartered Accountants

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Bad Debt Management

We are living in difficult economic times and entrepreneurs are experiencing shortages on their profit and loss accounts. On top of achieving reduced levels of profitability, businesses face greater difficulties in converting their sales into cash, due to bad debts.

This occurs as the result of the credit restrictions experienced in lending markets, which has lead to an increase in the number of company bankruptcies in Spain. Rises in levels of debtors for banking institutions and the amount of unpaid obligations has generally rocketed.

We would like to consider some of the vehicles available to enable the business to either ensure the collection of debtor balances by financial product means, or to mitigate their existence. 

It is the accountant’s job to minimise the impact of bad debts on the business accounts utilising any reliefs available to ensure that the client is not taxed on those transactions which are more likely to remain unrecoverable.
 
The qualifying criterion relevant to each method of taxation does vary, and consequently care needs to be taken when applying any reliefs.

The criteria for the reliefs available in relation to the different taxes suffered by businesses are summarised below:

 

 
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