Control of non-payment begins long before a client actually stops paying. In an SME, the real risk is not just “having delinquent clients,” but accumulating overdue balances that strain cash flow, distort margin analysis, and force the financing of working capital with debt. Therefore, the first technical tool is the aging analysis of balances: organizing outstanding invoices by due date ranges and turning that report into management decisions.
The aging of balances is built using a cut-off date and a clear rule: it is classified by days past due, not from the invoice date. Typical ranges are 0 to 30 days, 31 to 60, 61 to 90, 91 to 180, and more than 180. The value lies not in the report itself, but in its interpretation: if the balance is concentrated in 0 to 30, the issue is usually collection discipline; if it grows in 61 to 90, there are often documentation issues, disputes, or lack of follow-up; if 91 to 180 increases, the risk is already one of impairment and requires measures such as blocking, negotiation, or external collection; if it exceeds 180, the priority is to protect cash flow and adjust accounting to avoid “inflating” results.
From an accounting perspective, it is important to distinguish between management language and accounting language. In management, people often talk about “provisions,” but under the General Accounting Plan, the usual approach is to recognize credit impairment when there is objective evidence that it will not be collected under the agreed terms. This prevents presenting an overvalued accounts receivable asset and anticipates the real cost of non-payment.
The key technical aspect is how you determine that percentage. It is not about arbitrarily setting “100%,” but about basing it on indicators: payment history, breached installment agreements, existence of litigation, explicit refusal to pay, known insolvency, closures or business cessations, or reliable external information indicating inability to pay.
In internal control, the typical mistake is reacting too late. An effective practice is to review the aging of balances on a fixed schedule—weekly if volume requires it—and link each range to a specific action.
Managing non-payment is, essentially, about combining follow-up discipline, evidence-based impairment estimation, and consistent accounting records. When these three elements are aligned, the company collects sooner, recognizes in time what is difficult to recover, and prevents delinquency from becoming a silent drain on cash flow.
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