The document defines insolvency as when a business or individual cannot pay their debts when they are due. It provides examples of reasons why insolvency may occur, including insufficient financial management training, failure to manage risks, and changes in the business environment. It also discusses credit control and debt recovery, including performing credit checks and actions that can be taken to recover debts such as sending reminders, contacting the debtor, and pursuing legal action. Finally, it defines bad debts as when a business is unable to obtain payment that is owed, and notes that bad debts will be pursued but may eventually be written off if the debt is too small to chase.

2. WHAT IS INSOLVENCY?
CREDIT CONTROL AND DEBT RECOVERY
BAD DEBTS
Presented by:
Karen Serrato García
Octubre 2017

3. What is Insolvency?
• Is a situation when a business (or an
individual even) cannot pay its debts
when they fall due.
For example, a business has used credit to
purchase goods but has no money to pay
the bill when it is presented by the supplier
of the goods.

4. What is Insolvency?
Insufficient training in financial management
Have insufficient training in accounting and
finance:
• Engage in appropriate budgeting
processes
• Identify threats to sources of income
• Detect over and unplanned expenditures
• Monitor variances between planned and
actual financial outcomes
• Ensure full compliance with tax

5. What is Insolvency?
Failure to manage risks
A business or organisation may become
insolvent if there is a failure to manage
risks and suffer financial losses as a
result of:
• Fraud and embezzlement by
employees
• Thefts and fires which should have
been covered by insurance
• Litigation for negligence

6. What is Insolvency?
Changes in the business environment
A business or organisation may become
insolvent if there is a failure to deal with
changes in the business environment such
as:
• The number of people joining as
members
• Offering new programs, improving
facilities, engaging in promotion.
• Changes to important government
funding sources.

7. Credit Control and Debt Recovery
Credit control is about keeping your debtors, people who owe you money,
under control and recovering debts.

8. Credit Control and Debt Recovery
The first aspect of credit control is to perform credit checks on any entity, person
or organisation, that wishes to obtain goods and services from you without
paying at the time of the transaction.
Credit Checks

9. Credit Control and Debt Recovery
The actions you can take are as follows:
• Send a reminder
• Telephone and/and write to the
debtor asking.
• Put the customers unpaid account in
the hands of a debt collector for
payment.
• Sue for payment in a court of law
Debt Recovery

10. Bad Debts
The term "Bad Debt" is used to describe
the situation when a business is unable
to obtain payment for an amount of
money that is legally and properly owed
to it.
Bad Debtd Expense

11. Bad Debts
For example, a business sells goods to a
customer. When the time comes for the
customer to pay the bill, they do not pay the
debt or they cannot pay the debt. This may
occur because the customer has no money
and becomes bankrupt, or they simply
disappear.
Bad Debtd Expense
Here waiting for you to pay me what I should!

12. Bad Debts
• The business will put pressure on the
customer to pay
• depending on the relative size of the debt,
the business may choose to give up
chasing.
Bad Debtd Expense

13. Bibliografy
http://www.leoisaac.com/fin/fin010.htm