R&M audit: 8 out of 10 companies provision unpaid invoices

Publish date: 03-06-2010
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Over 80% of companies which registered profit in 2009 set up provisions in their annual report for unpaid invoices whose number has grown lately, according analyses made by R&M Audit, one of the leaders of the accounting, fiscal consulting and audit market. "Last year the crisis brought major modifications in the managers' and shareholders' actions. They have become very attentive and got involved in cost control besides using all legal methods and instruments which allow them to reduce taxes, " said Mirel Serban, Managing Partner at R&M Audit.

In the years of economic growth, management was based on increasing market share and incomes, but as of the spring of 2009, managers and shareholders have become extremely receptive to suggestions to use provisions for clients who do not pay.According to R&M Audit analyses, only 60% of provisions for unpaid invoices at the end of 2009 were cancelled at the end of the first quarter of 2010, when the debts were paid. The average payment time for invoices grew significantly last year and continues to have the same evolution this year.

"Producers in particular meet great difficulties, payment time exceeding even 120 days, because of the long circuit of goods to the final buyer and the money circuit back. Provisions for unpaid invoices can be set up 270 days after the payment term and often the tax on profit was already paid and affected the company cash flow.

The reduction of time for non payment for which provisions can be set up and the increase of the percentage for which provisions can be made would be very useful measures to companies in the present situation, considering the very difficult money circuit. Moreover, in case debts are paid, amounts go from provisions to incomes, can be included in the tax basis and taxes could be paid for real incomes," Serban showed.

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