Is an old invoice still worth chasing?

An old balance needs a fresh assessment

A business owner finds an old unpaid invoice while preparing accounts. The customer still appears to be trading, but the employee who arranged the work has left and the owner cannot remember the last follow-up. Writing it off may be premature; sending a strong demand without checking the history may also be a mistake. The first task is to rebuild a reliable picture.

Find the last reliable account position

Locate the original invoice, order, delivery records, credits and bank receipts. Confirm that the amount was not paid under another reference or settled in a later agreement. Old bookkeeping entries can outlive the debt they were meant to record.

Look for correspondence acknowledging, disputing or proposing to settle the balance. Keep dates and original documents. Do not rewrite an uncertain history as a continuous series of unpaid demands when there were actually long gaps or incomplete records.

Check the legal clock promptly

The time available to bring a claim depends on the claim and applicable law. Have the relevant dates checked before assuming there is still time. An old invoice may raise issues that cannot be resolved by sending a new copy with today's date.

Ask specifically whether any payment, acknowledgement, prior proceedings or agreement affects the assessment. Do not use a generic deadline found online as a conclusion about your debt. The adviser needs the original timeline, including facts that may weaken the claim.

Assess the customer as it is now

Confirm the correct debtor and current business status. A familiar trading name may now belong to someone else. Establish what information is available about the debtor's ability to pay before investing heavily in a claim.

Business.gov.au notes that court action can be costly and time-consuming. Compare that expense with the evidence, amount and practical recovery prospects. A legally arguable debt is not automatically a commercially sensible litigation project.

Source: When to go to court over a dispute — business.gov.au

Make a documented decision

Choose whether to make a measured enquiry, obtain further evidence, negotiate or stop spending on recovery. Record the reason and who approved the decision. If the debt will be written off in the accounts, discuss the accounting treatment separately with the accountant.

Use the review to improve current collection routines. Assign future accounts a review date before records become difficult to find. That lesson is useful, but today's decision should remain grounded in what can still be established about this particular balance.

Check the clock before spending on recovery

Reconcile the old balance and recover the original timeline.

Have claim timing checked before issuing a new demand.

Compare evidence and likely recovery with the cost of further action.

Call CRP today about assessing an old debt before committing more recovery expense.