Despite the fact that the phrase “overdue receivables” is familiar to almost everyone, only a few can give an exact answer about what it is all the same and what kind of results an enterprise may have when it occurs.
In this article we will discuss the concept of overdue receivables (DZ). As well as how its presence affects the work of the organization.
Write-off of overdue receivables is a transaction that accountants do quite often. How to identify the correct aspects of writing off receivables, we learn from our article.
The concept of overdue DZ
Accounts receivable is the amount of debt owed by other citizens and organizations that are debtors to the company. In other words, DZ is the amount that companies owe to its counterparties.
If the debt has not been paid within the time limits established by the contract, then it is called the overdue amount of DZ.
The late collection of a remote sensing may lead to undesirable results for the company itself.
Contingent arrears can be divided into:
- doubtful;
- hopeless.
The first type of RS is considered doubtful. It arises in case of non-payment of timely payments for goods, services from company counterparties. It is not secured by pledge, surety or any other guarantee.
If the statute of limitations for a claim for repayment of debt passes, the obligation of the debtor is terminated due to the impossibility of its performance.
In this situation, DZ becomes hopeless. All conditions for repayment of the debt are individual and are determined by the agreement concluded between the parties.
It is impossible to accurately predict which of the amounts of DZ may become overdue, and even more so hopeless.
In some versions of the contracts there is no exact date, but it can be tied to a specific event (for example, three days after the signing of the act).
What is the danger of having an overdue DZ for the enterprise
Overdue DZ means that it will be impossible to return the company's debt back and there are no real ways to do this. Its presence adversely affects the financial stability and liquidity of the company, as well as overall performance indicators.
The main reason for the appearance of such amounts is that at the stage of signing an agreement with counterparties, most companies do not assess the occurrence of possible risks, do not study their partners and their financial condition. DZ, in general, is a normal indicator in the balance sheet of the company. However, it has its own allowable limit, and even more so the limit on overdue DZ.
What are the effective ways to return DZ until it is written off
Work with overdue debts should be very painstakingly and actively in order to prevent the moment of its cancellation.
In the process of such work adhere to the basic principles:
- liaising with the counterparty;
- rational measures of influence on the counterparty.
Among the most popular methods for working with overdue loans for remote sensing are:
- initial measures: correspondence, letters of complaints, calls, meetings;
- filing a complaint with a court;
- writ of execution from the FSSP.
To prevent such situations at the time of conclusion of the contract you need:
- examine carefully the partner;
- get a pledge or some kind of security from the counterparty;
- get a consultation with lawyers;
- to carry out insurance.
What DZ can be written off
It is impossible to write off all the debts of the company. Only those that meet certain signs of hopelessness. The doctrine of bad debt is given in paragraph 2 of Art. 266 of the Tax Code of the Russian Federation.This is the expired debt, as well as the debt of a liquidated company or a company that is excluded from the Unified State Register of Legal Entities as inactive.
Write-off of overdue receivables can only be after the recognition of insolvency process in the event of liquidation of the company or the decision of the judicial authority that the funds cannot be restored due to the absence of the company.
If two companies owe each other, then first you need to offset the debts to each other, reducing the amount of subsidiaries by the amount of debt to the counterparty. If the counterparty still owes, then these funds are considered unrealistic for reimbursement for receipt, and they can be written off as overdue DZ.
What to do with overdue DZ
Such debt for the company means, first of all:
- all efforts were made by the company to repay this debt;
- the probability that the buyer will change his mind and return the amount is minimal or absent;
- the period during which the debt is registered in the company has already expired.
Writing off such a DZ is a special procedure that requires:
- careful formation of a package of documents to justify the amounts and reasons;
- formation of transactions in accounting;
- inclusion of amounts in tax expenses.
You can’t just write off the debt and forget about it. A number of actions still need to be performed:
- transfer the debited amount to account 007;
- 5 years after the cancellation, monitor the counterparty, suddenly everything will work out fine;
- and after five years have already completely forgotten about the amounts.
How to write off DZ, for which the statute of limitations expires
Usually this period is three years, but may be interrupted if:
- the debtor accepted and signed the reconciliation report
- sent a letter - recognition of a debt or a request for a deferment;
- interest or penalty were paid;
- the companies made an addition to the contract, where the obligation of the debtor is recognized;
- court accepted the claim.
The statute of limitations for a lawsuit that was interrupted, the company must re-start counting. This period does not exceed 10 years since the formation of the debt (Clause 1, Article 181 of the Civil Code of the Russian Federation).
Inventory before decommissioning
In accordance with Part 1 of Art. 11 FZ dated December 6, 2011 No. 402-FZ “On Accounting”, the assets and liabilities of a company are subject to accounting and inventory.
Cases, dates and inventory procedures, as well as a list of objects are established by the business entity.
In the process of inventory of DZ by means of documentary verification, the correctness and reasoning of the amounts of DZ and KZ, including the amounts for which the deadlines have expired, are established. The number of inventories, their date, a list of assets and monetary obligations is established by the management of the organization.
The inventory takes place to be:
- upon transfer of property for rent, acquisition, sale;
- when changing materially responsible persons;
- prior to annual reporting.
Under the inventory of receivables refers to the procedure for the audit of settlements with debtors of the company.
It consists in reconciling the sums of values that are listed on the corresponding accounts of accounting (DZ and KZ). Here, the debt is checked for its delay and hopelessness. An inventory commission is formed, which carries out all the necessary procedures.
DZ write-off procedure
Establishes the procedure for writing off overdue receivables PBU dated 07.29.1998 No. 34n. In this case, DZ can be written off for each object on the basis of:
- inventory taken with written justification for writing off overdue receivables;
- directions from company management.
At the same time, overdue DZ should be kept under control: up to 5 years it will be reflected in the balance on account 007, the obligation remains to look at the possibility of recovery if the financial position of the debtor changes for the better.
Analytics on account 007 is performed in the context of each counterparty and each debt is written off to a decrease.
Consider the general procedure for writing off overdue receivables.
For each of the overdue amounts of debts, it is necessary to prove the need to write it off with such arguments as:
- documents that confirm the presence of debt: contracts, invoices, payment orders, reconciliation acts, calculations, requirements for debt repayment in writing;
- documents that confirm the inability to collect the debt - extract from the register at the time of liquidation, etc.
Next, an order is issued to write off DZ. It is made in accordance with certain rules:
- on the grounds that have been permitted by law;
- he must have reliable documentary support;
- organized on the basis of correctly applied tools.
The order is issued in the usual form or independently developed by the company.
Short circuit write-off
Consider writing off overdue receivables and payables too.
Write-off of expired short-circuit, as well as write-off of short-term securities, is reflected in tax and accounting, depending on the sources of its appearance, for example, debt on purchased but not paid goods.
In tax accounting, non-operating income includes any short-circuit that is subject to write-off:
- before the budget for the payment of tax payments, fees, penalties and fines;
- extrabudgetary funds for payment of payments, fines and penalties;
- to members of the organization for unclaimed income from securities, etc.
In accounting, the written-off short-circuit is included in other income and is indicated on account 91, sub-account 91-1.
Postings for writing off overdue receivables and payables are as follows:
DB 60.62.76 - Ct 91-1.
Reserve formation
The reserve for doubtful debts (RSD) refers to the amount that is created in order to ensure that the data in the accounting for remote sensing are reliable. It has an estimated value. The amount of its changes is reflected in the expenses and income of the company.
The basis for its creation is the procedure for conducting an inventory of RS. The amount in respect of each debtor is evaluated and determined individually depending on its financial situation.
RSD formation technique:
- determination of the amounts owed by counterparties in case of violation of the maturity dates and the absence of guarantees;
- for each doubtful debt the reserve value is calculated.
The main methods for creating reserves:
- interval method;
- expert method;
- statistical.
In the first version, the RSD can be determined for each quarter in the amount of percent of the debt and depending on the duration of the delay.
In the second method, the amount is created according to experts, as they believe, what amount will not be repaid. For this, the state of the counterparty is studied.
In the third method, data for many years is used to determine the share of bad debts in the RS.
Accounts receivable can be written off due to the generated RSD for the company.
It is created immediately, as soon as a questionable DZ arises after the inventory. The calculation of the RSD can be carried out according to the formula:
RSD = 0.5 * C1 = C2,
where C1 - doubtful DZ for a period of 45 to 90 days;
C2 - doubtful DZ for a period of more than 90 days.
However, it should be noted that the size of the generated RSD cannot be more than 10% of the company's revenue.
The entry record on the accounts of the accounting unit will be as follows:
Dt 91.1 Kt 63 - the creation of the RSD.
In the process of writing off DZ to the amounts of RSD, a record is made:
Dt 63 - Kt 62 - there was a write-off of DZ on RSD.
Amounts included in RSD may be included in operating expenses in accounting or in non-operating expenses when accounting for taxes.
Write-off DZ in accounting
Consider the general procedure for writing off overdue receivables.
If the company has a reserve, an entry is made: Dt 63 Kt 62 (76) - write-off of DZ from RSD.
If the debt exceeds the reserve, the difference is explained by other expenses: Dt 91-2 Kt 62.
If the company has not made a reserve, then the postings look like this:
- Dt 91-2 Kt 62 - write-off in costs of a hopeless DZ;
- Dt 007 - Debt written off for balance.
On account 007, analytical accounting should be carried out in the context of each counterparty.
Write-off transactions
The package of documents and the order to write off DZ are documentary evidence for the following accounts:
- write-off DZ by order of management in the presence of reserves: Dt 63 - Kt 62;
- fixing the amount of debited debt on account 007;
- write-off of remote sensing in the absence of reserves: DB 91-3 Ct 62;
- DZ is on account 007.
In the event that the amount previously written off to losses is recovered from the counterparty, the option for overdue receivables and accounting entries will be as follows:
- receipt of funds: Dt 51 - Kt 91-1
- DZ withdrawal from account: 007
Writing off DZ for losses is a huge initial work with debtors, and all possible measures are taken to repay the debt.
Only when it is clear that it is unrealistic to return the money, you can write off a hopeless DZ and keep records of overdue receivables in the company.
Write-off documentation
To write off DZ and KZ, you need to make an order for an inventory of debt and put its indicators in the form of INV-17.
Next, the manager issues an order to write off the debt of the company according to the act on the inventory, which must include the amount of debt, a description of the situation in which the debt was doomed, a reference to the number and date of the inventory act.
The tax authorities in particular painstakingly inspect the debts written off, therefore it is better to attach the history of its appearance and documents that confirm the validity of the transaction to the company's statements.
As a result, three documents are needed to write off DZ:
- Inventory Act (INV-17).
- Letter of justification. It should indicate the name of the debtor, the date of the appearance of the debt, the grounds for the appearance of the debt, which documents confirm the appearance of the debt, the amount of debt for each debtor, the calculation of the limitation.
- Order.
Order to write off DZ
The order to write off overdue receivables has its own rules for compilation. The preparation of the order can be performed:
- in the case of the existence of grounds which were permitted by law;
- with relevant documentation;
- based on the results of a complete inventory of debts.
The order must be executed in accordance with the accepted form or in accordance with its template specially developed by the company.
In addition to general information (company name, order number and date, manager's signature), in the example of an order to write off overdue receivables reflect data related to this type of document:
- name of the debtor;
- the amount of DZ to be debited;
- basis for debt relief;
- explanation of the order of cancellation of remote sensing (due to the reserve or part of the costs).
The act of writing off DZ
Consider the act of writing off overdue receivables and a sample of its filling.
When performing it, common approaches to documenting business operations are used, and specifically:
- opens a block that contains data about the company (name, TIN, address, etc.);
- the title should briefly reflect the purpose of the document;
- the content should reflect comprehensive information about the write-off of remote sensing and about the reasons;
- The document ends with the signature of the chief accountant or another authorized person responsible for accounting in the company.
The volume of most of the act on the abolition of DZ depends on the types, size and structure of the written off debt.
The following items may be included in the content of the act to cancel the DZ:
- information on orders to conduct an inventory and review its results;
- transfer of initial data on remote sensing (details of contracts with debtors, amounts and terms of fulfillment of obligations under the agreement, etc.);
- a history of relations with a debtor for debt collection (transfer of a claim);
- grounds for writing off the DZ (for example, if the debtor is eliminated - these extracts from the Unified State Register of Legal Entities, court decision);
- conclusions.
It is necessary to attach a full set of documents that confirm the fact of delay and recognition of hopelessness, including an inventory.
Registration of an act on cancellation of DZ requires the simultaneous issuance of an order signed by the manager of the company, on the basis of which the process of cancellation is ongoing.
Tax accounting write-offs
Consider writing off overdue receivables in tax accounting.
In tax reporting, the write-off method for DZ depends on whether RSD is organized. In this situation, the write-off of overdue receivables in tax accounting comes from reserves. If the reserve is not formed, write-offs of subsidiaries are made for non-operating expenses. The expense is recognized as the date of the action itself:
- the statute of limitations has passed;
- a record of the termination of the debtor's work in the registry;
- documents from the FSSP.
Documents for tax purposes must be stored for at least 4 years.
Features of write-offs in a budget institution
Recently, the issue of writing off overdue accounts receivable in a budget institution has become increasingly important.
Difficulties with the budget force the authorities to find new reserves in it.
Special separate accounts are kept for writing off overdue receivables in the budget. This is important to consider.
The inability to write off overdue receivables at the budget institution on time can lead to a significant distortion of the reporting characteristics of the institution. This is a must know.
Features of cancellation of overdue receivables and budget postings are expressed in a clear regulation of debt accounting for certain types of transactions through the use of budget classification of costs.
Control over the movement of subsidiaries is timely done by the treasury in the process of cash execution of budgets of all levels.
The write-off of the DZ, hopeless for collection, is made in the manner that was established by the main manager of the financial resources of the institution.
Within the limits of his own competence, the main manager of budget funds has the right to establish the procedure for approval of write-offs of hopeless DZ by subordinate budget institutions.
Features of cancellation in the simplified tax system
Consider the cancellation of overdue receivables at the simplified tax system.
When applying the special regime of the simplified tax system, the costs associated with writing off bad debts, including for DZ, are not included in the costs when determining the tax base for the payment of tax payments of the simplified tax system.
Features of writing off DZ in 1C 8.3
When writing off overdue receivables at 1s 8.3, the document “Debt adjustment” is used. The write-off sequence is as follows:
- Section: Sales - Debt Adjustment.
- The "Create" button in the "Type of transaction" field, select "Debt cancellation".
- In the Debt write-off field, select the option of debt that you wish to write off: customer debt, customer advances, supplier debt or advance supplier.
- If the debt is written off under the contract in a currency other than the currency of Russia, select it in the "Currency" field.
- In the “From” field, enter the date of debt relief.
- The “Fill” button in the tabular part of the document will automatically select data on the corresponding debt (contract, settlement document with counterparty, amount). Information can also be entered into the table part manually with the "Add" button.
- On the “Write-off Account” tab, select the account with which the corresponding debt will be debited.
- Key "Post" to view the totals.
Conclusion
Overdue DZ represents the debt on the counterparty, which he does not pay in the period established by the contract. In case of violation of such terms, especially a longer period, it is necessary to form the RSD for the company and begin to work with these amounts in the aspect of their doubtfulness.
The process of writing off DZ is simple, but strictly regulated.Its violation is fraught with claims of tax inspectors and additional tax or fines for accounting errors. Therefore, before you write off the DZ, make sure that the inventory has been carried out and an appropriate order has been issued.
The government has expanded the list of circumstances for writing off DZ. Now you can wait 3 years and write off the debts of companies excluded from the Unified State Register of Legal Entities on the date of exclusion of the debtor.
It is necessary to increase the company's costs by writing off accounts receivable and make every effort to eliminate the counterparty receivables, offering, for example, installment plans or debt restructuring.