Factoring Companies Guidebook
Delinquent Debtors
Definition
Debtors with outstanding balances beyond our normal terms of funding.
Concerns
These debtors may represent customers with cash flow problems and therefore a reduced ability to settle their debts.
Alternatively, an examination of the reasons for non- payment may reveal problems with the Client in terms of product quality or administrative controls. They may also be indicators if the Client granting extended terms of payment.
Identification
Fully analyse the debtors >90 days column and the reasons for non-payment of these debts. In a Discounting facility these issues should be highlighted well in advance of 90 days if at all possible.
Treatment
If these are as a result of cash flow difficulties, we should consider reserving all balances outstanding for that customer, not just those over the funding period.
