Don't end up paying tax on uncollected debtors!
Anna Stubbs • November 15, 2025
Did you know you still have to pay tax on uncollected debtors? This is because you pay tax on your sales figures irrespective of whether you have collected the cash.
To avoid paying tax on uncollected debt, here are some quick and easy-to-implement debt collection strategies to ensure your hard-earned money is sitting in your bank account (and not in theirs):
- Agree on your payment terms at the time of sale
- Get the Terms of Trade signed off in writing before you start the job
- Include a guarantee in the payment terms
- Ask for a deposit
- Invoice as quickly as you can
- Change your payment terms to 7 days or ‘on delivery’
- Send statements with only two columns – current and OVERDUE
- Schedule overdue reminders and follow up the day after the due date
- Put someone other than the business owner in charge of collection – owners are usually too soft!
- Document what your customers have promised in terms of payment and hold them to it
- Use a debt collector sooner rather than later – the longer you leave it, the harder the debt will be to collect
- Stop credit for customers who are late on payment
Take action! Reflect on how many of these ideas you've integrated into your business, and check how many you're actively applying. Don’t let procrastination hold you back — address your debtors today!
“It’s the squeaky wheel that gets the oil” – Anon
Running a business costs money. There are always costs, overheads and supplier bills that mount up – and these expenses will gradually chip away at your cash position, making it more difficult to grow and make a profit. So, what can you do to reduce your spend levels? And what impact will this have on your overall margins, profits and ability to fund the next stage in your business journey?
You know that an accountant can look after the books and keep your numbers in good order. But have you ever thought about the additional services and advice that an accountant can bring to you as a fully fledged business adviser, coach and mentor? Let’s explore what other business-critical services your adviser could offer:
To understand the financial position of a business at a specific point of time, look at the balance sheet. The balance sheet may also be called the statement of financial position. Together with the Profit and Loss Statement, and possibly other reports such as the Statement of Cash-flow, these reports provide a complete understanding of the financial position and business performance. So what’s involved: The balance sheet has three sections: assets, liabilities and equity.