Unpaid invoices – customer likely to go bankrupt

Interesting question. I found this on the internet:

Unpaid invoices and taxes

To write off an unpaid invoice, the tax authorities apply the principle of 'proportionality'. In short, if you have sent a number of reminder emails for an invoice of €50, this will usually be sufficient for the tax authorities. However, for a larger invoice amount, a simple reminder will not suffice. You may only write it off once you have exhausted all possibilities, from collection by a debt collection agency to a notice of default by a bailiff or lawyer.Is it stated that an invoice is not paid? Then you may write off the invoice via your accountant, so that it is deducted from your taxable income. Do you have a sole proprietor with single-entry bookkeeping? Then it is sufficient to credit the invoice.Is it not yet stated that an invoice will not be paid? Then question your accountant to book a write-down, so that the invoice is temporarily removed from your accounts. If the invoice is paid in the next year, the write-down will lapse and you can simply re-enter this income in your profit. If it turns out next year that the invoice is definitely lost, you can write it off permanently. Recovering vAT on an unpaid invoice In principle, vAT is payable, except in the following three cases: When your customer is bankrupt.

Scenario 1: my customer is bankrupt

Has your customer recently been declared bankrupt? You may be able to recover the goods delivered, or part of the outstanding debt, through the curator. However, you will often be left empty-handed. In that case, you will have to settle for a certificate from the curator stating that the invoice is not paid any longer. At least this way, you can reclaim the vAT and remove the invoice from your taxes. Even if you only recover part of the amount, you can question a certificate from the curator for the remaining amount.Tip: Do you have to make purchases of goods for a customer? Then work with an advance invoice as much as possible, so that this cash outlay is already (partially) reimbursed. You could also include a 'retention of title clause' in your terms and Conditions. In the event of bankruptcy, this can help you get goods that have not yet been paid (in full) back. This means you can still use them as spare parts, for example.Scenario 2: My customer refuses to pay (and is not bankrupt) Of course, you will first try to identify the problem and resolve it together with your customer. But sometimes you just cannot reach an agreement.

Is your customer refusing to pay even though they are not bankrupt? Then you must prove that you have done everything possible to collect the invoice. The tricky part is that you have to prove this on a case-by-case basis. You cannot simply write off all unpaid invoices. You will have to create a file for each invoice, containing all reminder letters, emails and other communications. Is it a larger amount? Then the tax authorities will only consider that you have done everything if you can also submit a notice of default. Do you have a certificate of uncollectibility? Then you can also recover the vAT.

What can you do now?

If you have not already done so, now is the time to draw up a status for all outstanding invoices. What reminder emails and letters have you sent? What communication has already taken place with the customer? Are there any bankruptcies here for which you still need to request a certificate? Can you still send a reminder?This will enable you to request the necessary write-downs from your accountant and, if necessary, write off an amount of invoices permanently.