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How to prepare for End of Financial Year

Posted By Corey, CFO  
19/05/2025

IS IT BAD-DEBT TIME?

As a seasoned CFO, I know that this time of the year leading up to the End of the Financial Year, presents many headaches for companies as they turn their attention to reporting and tax season. It is time to “clean out the vault” of obsolete stock, write down under-performing assets, impaired fixed assets and provide for bad debts.

TAX TIME

Tax time can indeed be taxing when it comes to bad debts. You can’t just provide for a bad debt and get our tax deduction – you must write it off as “uncollectable”.

To be specific, the tax guidelines indicate the deduction must determine the debt as actually BAD, not just “merely doubtful”. It doesn’t mean you must commence formal proceedings to recover the debt, but you must provide evidence of communications seeking payment, reminder notices and attempts to contact the debtor by phone/email.

To claim the tax deduction, the debt must be BAD and written out of your customer ledger.

There are further implications when it comes to GST and maybe complications around CGT. In 2015, the rules changed to include a requirement to pass a “same business test” regarding your business continuity. To further complicate things, writing off a debt is different from “forgiving a debt”. Debt forgiveness also has its own complexities.

DOES THIS SOUND TOO HARD?

All businesses want to mitigate bad debt, however, don’t always have robust processes or the right partners in place to support strong loss mitigation.  This is where Access Mercantile can help by leveraging our fully integrated collection capabilities. We place the customer at the centre of what we do and easily pivot to the right collection activity to match the current customer behaviour with a view of engagement and ultimately debt resolution. We simply do not just do the same thing repeatedly that in most cases yields no resolution, instead , through our unique service offering we can leverage multiple collection interventions [call centre, field services, legal, skip investigation and location] all at the same time under the one roof to get a result.

 

WHY ACCESS MERCANTILE?

Outside our unique integrated collection service model, Access Mercantile, has industry leading technology like IDebt360 [pure cloud fully automated CRM under pinned by Salesforce ], that provides real time updates to clients around collection performance and allows our people to navigate process and tasks with ease due to the in-built level of automation and business intelligence. We have dedicated collection treatment streams across all stages of your debt-collection cycle that profile your debt and determine ‘next best action’ to engage your customers and resolve sometimes complex debt situations.

Access not only improves your debt collection outcomes but protects your data with stronger cyber-security assets, inclusive of a 24/7 Security Operations Centre [SOC] . Our expert reporting also drives actionable and meaningful insights to help improve your business.

Our ISO- 27001:2022 Information Security Management System [ISMS], accreditation is a strong testimony that we regularly invest and adopt the latest standards and capabilities to protect your valuable data whilst performing robust and timely debt collection services.

 

THE TIME IS NOW

Engage us now as your expert partner to design customised debt collection solutions for you so you can focus on what you do best and leave Access Mercantile to do the heavy lifting around collections.  Learn more at www.accessmercantileservices.com.au