Tax Law, Accounting and Audit · Audit, Accounting and Reporting
Accounts receivable management affects both cash flow and the legal ability of a business to recover money from customers or other debtors. Poorly documented or overdue receivables can turn an accounting asset into a tax issue, collection dispute or direct financial loss.
What accounts receivable represents
Accounts receivable is money owed to the company for goods supplied, work completed or services provided. The source distinguishes current receivables of up to 12 months from long-term receivables exceeding 12 months, and also separates debts that are current, overdue, doubtful or bad.
Document the underlying transaction
Recovery becomes more difficult where there is no properly executed contract or where performance cannot be proved. Businesses should retain written agreements, invoices, delivery or acceptance records, payment documents and relevant correspondence.
Control limitation periods
Source material states a general three-year limitation period in Ukraine. Businesses should therefore track overdue debts, send claims in time, use reconciliation statements and record any formal acknowledgement of debt by the debtor.
Tax and accounting consequences
Doubtful or bad debt can affect reserves, financial results and corporate income tax treatment. A debt should not simply be removed from the balance sheet without documentary grounds.
Documents supporting a write-off may include a court decision, enforcement documents, evidence of debtor liquidation or confirmation that bankruptcy proceedings have been completed, depending on the circumstances.
Collection tools
formal payment claims and demands;
court proceedings;
court orders where the procedure is available;
enforcement proceedings;
recovery against debtor assets;
mediation or debt restructuring.
Internal receivables control
review receivables monthly;
use properly drafted contracts;
monitor payment dates;
reconcile balances with counterparties;
start pre-trial collection promptly;
do not postpone litigation until the limitation period becomes critical.
Evidence Supporting Receivables
Receivables should be supported by contracts, invoices, acceptance documents, delivery notes, payment records and business correspondence. Monitoring limitation periods, sending claims in time, signing reconciliation statements and documenting any acknowledgement of debt by the debtor is recommended.
Receivables recovery strategy should combine accounting control with legal collection from the moment payment becomes overdue. Early action preserves evidence, protects limitation periods and improves the probability of converting the receivable back into cash.
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Price: Legal and Accounting Management of Accounts Receivable