Getting Your AR and Credit Teams Ready for Financial Year
End

As financial year end approaches, Accounts Receivable (AR) and Credit
teams play a crucial role in supporting strong cash flow, accurate
reporting, and effective risk management. A proactive and structured
approach in the months leading up to year end can make a significant
difference to both financial results and audit readiness.

Below are the key focus areas to discuss with your AR and Credit
teams to ensure they are well prepared.

Start Early with a Detailed Review of Overdue
Debt

Preparation for year end should begin at least three months in
advance. This lead time allows teams to conduct a thorough review of all
overdue accounts and identify where focused collection efforts can have
the greatest impact.

Segment overdue balances by age, value, and risk profile, and
establish clear ownership for follow‑up actions. Early identification of
disputed or queried accounts enables escalation where required and
avoids last‑minute decision‑making under pressure. Consistent reporting
and regular progress reviews during this period help maintain momentum
and accountability.

Engage Business Managers on Settlement
Strategies

Having cash in the bank is preferrable to expecting cash in the
future. Close collaboration with business managers is essential when
addressing overdue debt, particularly for high‑value or long‑standing
balances. Discussions should focus on what realistic settlement outcomes
look like, considering customer relationships, commercial
considerations, and the likelihood of recovery.

For debts being paid via instalment arrangements, consider whether
revised payment plans or incentives could accelerate cash collection
before year end..

Review Bad Debts for Collectability

A comprehensive review of all bad and doubtful debts is a critical
year‑end activity. Assess each account objectively for collectability,
considering payment history, customer financial position, dispute
status, and any recovery actions taken to date.

Reassess Provisioning for Doubtful Debts

Year end is the right time to revisit provisioning levels to ensure
they accurately reflect the current risk profile of the receivables
ledger. Provisions should be based on up‑to‑date information, including
ageing, bad debt experience, and known customer risks.

Reassessing provisions not only improves the accuracy of financial
statements but also provides valuable insights into trends affecting
customer payment behaviour and credit exposure.

Make Informed Decisions on Bad Debt Write‑Offs

With a clear understanding of collectability and appropriate
provisioning in place, teams can make informed decisions on bad debt
write‑offs. Write‑offs should follow established policies, approval
thresholds, and governance frameworks to ensure consistency and
compliance.

Timely write‑offs remove uncollectable balances from the ledger,
providing a cleaner receivables position and allowing teams to focus
effort on recoverable debt with robust KPIs. Clear communication of
write off decisions also helps manage stakeholder expectations and
supports transparent financial reporting.

In Summary

Effective year end preparation for AR and Credit teams is about being
proactive, disciplined, and collaborative. Starting early, engaging with
the business, and applying robust review processes enables better cash
outcomes and reduces year‑end risk.