Factoring Companies Guidebook
Credit Balances
Page 24 of 105
Sales ledger accounts with negative balances.
See also : - Deposits and Unallocated Cash
Concerns
Credit balances can represent the following situations:
- Overpayments
- Credit Notes
- Duplicated Payments
- Deposits
- Unallocated Cash
Except in the case of unallocated cash, these amounts may be due from the Client to the customer. In many cases these will be found in the >90/120 day column and will reduce the total of the column they are in, therefore reduce the level of overdue debt, if not adjusted.
Identification
Review the detail within the aged debt analysis
Treatment
The credit balances in the >90/120 day column must be added back to the figures in those columns to ensure that the reserve is not understated.
