Factoring Companies Guidebook
Brought Forward Balances
Any balances appearing on a debtor statement or account as a consolidated figure, i.e. not broken down into the elements e.g. invoices, credit notes, cash receipts etc., which make up that balance.
Concerns
In order to recover customer account balances we must be able to identify, support and evidence what makes up that balance. Failure to do this may result in loss for us.
Identification
Review debtor statements for any figure that is referred to with the narrative "Brought Forward Balance" or "b/fwd", rather than with invoice, credit note and receipt reference.
Treatment
The Client should be encouraged to detail fully the outstanding elements of all debtor accounts. All brought forward balances should not be funded. If we maintain the sales ledger these 'balances' should only possibly appear when the account is taken on and disapproved until such time as a detailed break down is provided or paid. Unless the payment matches exactly the brought forward balance, it will not be possible to allocate the receipt. Where the Client maintains the ledger, the ageing of brought forward balances should be checked, i.e. if over 90/120 days they would automatically not be funded, but if less than 90/120 days old, there is a greater problem, as in an event of a collect-out the less than 90/120 days debts would represent our prime security. Recovery of >90/120 days debts could be critical in a collect out.
