How Bookkeepers Can Avoid Bad Debt and Value Loss

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The thought of what our value is as bookkeepers is very clear to me as I write off debt at the end of the year for clients that did not pay. In fact, I often admonish myself for letting any client get behind and not managing the account and writing off hundreds, if not thousands, of dollars.

However, as I search the social media posts, I begin to see other colleagues having the same issues.

So, I ask you, as you write off debt that will never be received, what is your value? The amount of time you worked for is still the same, but now with lower income.

Your “stated value” for service has diminished. Additionally, the collection process will take up more of your time and add to that devaluing cycle.

What’s more is the overwhelming majority of the accounting professionals I see burned are women, not men.

So, two questions come to mind:

  1. Do the men not talk about the loss of bad debt?
  2. Are the women more sympathetic and let their clients wrack up large sums of money before they finally call it quits?

But for all of us, I offer some tips that can help us all to avoid the bad debt and loss of our value:

Minimizing Bad Debt

  • Make sure your engagement letter states the consequences for unpaid invoices (i.e., termination of work, collection proceedings).
  • Make sure your terms are clearly stated on your invoice (due date).
  • Get a credit card for ACH withdrawals for service.

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About Jan Haugo

Jan Haugo

Jan is the CEO of ICBUSA, a division of the Institute of Certified Bookkeepers Global, and owner of bookkeeping firm Jan Haugo & Associates


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Mar 10th 2017 18:45

One of the hardest things to do in our profession is to stop work for the client. But I think that is the only way to keep past due accounts in check.

I would set a limit of one months billing (assuming a monthly write up situation) to be past due and then stop work. In effect, you would have two months' work done, with one being past due.

If the client doesn't appreciate the fact that you are in business to help them and it's not pro-bono, I would look for other clients. That said, if the client is consistent, but slow, that is okay with me as well...As long as there is cash flow, I'm good. But I would still stick to one- to two-months' past due in this situation.

Thanks (2)
By jhaugo
to Michael Abrams
Mar 12th 2017 15:55

Good point. Thank you for your comments. I agree if the client is a slow pay and you can work with that great. However, if the balance begins to get out of control then you risk the possibility of loosing that money if the client turns to a no pay.
Monitor and clear consistent communications will help avoid these situations.
Thank you again

Thanks (1)