Overdue Receivables and Cash Flow Pressure
Fictional portfolio demonstration. All businesses, events and financial figures are invented for educational illustration; this is not a claim of client work.
Business background & problem
A fictional business has £48,000 in unpaid customer invoices, including significant balances more than 60 days overdue.
Financial evidence
| Measure | Value |
|---|---|
| Current | £12,000 |
| 1–30 days overdue | £9,000 |
| 31–60 days overdue | £11,000 |
| 61–90 days overdue | £10,000 |
| Over 90 days overdue | £6,000 |
| Total outstanding | £48,000 |
| Over 60 days | £16,000 (33.3%) |
Analysis and diagnosis
One-third of the receivables ledger is more than 60 days overdue. Ageing measures the time past due, not time since invoice issue. The £16,000 at greater risk merits immediate investigation, but age alone does not establish irrecoverability.
Investigation approach
- Validate invoice due dates, outstanding amounts and any unapplied receipts.
- Contact customers with balances over 60 days, first resolving disputes and missing documentation.
- Agree documented repayment plans where appropriate and escalate material non-responses.
- Review expected credit losses in accordance with the applicable accounting policy.
Recommended solutions & controls
- Assign invoice owners and track promise-to-pay dates.
- Issue statements and reminders before and after due dates.
- Monitor overdue percentages, disputed invoices and collections weekly.
Expected outcome
Faster resolution of overdue balances and improved cash visibility; actual collections remain uncertain.
Key learning
Reliable financial decisions depend on reconciled data, documented assumptions, proportionate controls and clear communication with stakeholders.