Role play Accounts and ledgers - debtor management

 

the student to participate and facilitate a role play meeting with Peter Crowe, a client from Hurst & Smith Plumbing Pty Ltd, who owes Azure Beach Accountants and Financial Services (ABAFS) $2,985.00. Part of the debt has been outstanding for 90 days.

Meet with the client to negotiate payment of debt

you will meet with Peter Crowe, from Hurst & Smith Plumbing Pty Ltd, regarding the non-payment of invoices for services from 90+ days.

you will meet with the client to discuss the client's arrears and negotiate with the client to have the debt repaid in full or develop a repayment plan, using the Debt Collection Plan template,

The scenario

Peter Crowe, a director of Hurst & Smith Plumbing Pty Ltd, has 3 outstanding invoices for BAS and IAS services Azure Beach Accountants and Financial Services provided over the last 90+ days. Total debt is currently $2,985.00, which is now above the agreed credit limit of $2000.

You are the Accounts Receivable Clerk at Azure Beach Accountants and Financial Services.

You have followed the organisational procedures to communicate with the client regarding the outstanding debt and the client has agreed to meet with you to discuss the repayment of the debt. Refer to the Customer Collection Notesat Table 2 below, which details the communication attempts.

Table 2 - Overdue Customer Collection Notes for Hurst & Smith Plumbing Pty Ltd

Date	Item	Notes	Outcome
15 Jan 2022	First Contact call with Hurst & Smith	Left message for Peter Crowe to contact me	No response from Peter Crowe
4 Feb 2022	Sent First Overdue Reminder Notice	Sent by email to Peter Crowe	No response from Peter Crowe
12 Mar 2022	Sent Second Overdue Reminder Notice	Sent by post to Peter Crowe	No response from Peter Crowe
24 April 2022	Sent Final Notice to Peter Crowe	Sent by email and post	Peter Crowe called 25 April.
26 April 2022	Peter Crowe called office and agreed to meet to discuss repayment of debt	Meeting arranged for 2 May 2022

2. Facilitate a meeting with Peter Crowe from Hurst & Smith Plumbers. The agenda for the meeting is along the lines of:
4. Introductions
6. Purpose of the meeting
8. Problem with the debt owed to Azure Beach Accountants and Financial Services.
10. Verify details with client of debt status, consequences of non-payment and capacity to be repaid.
12. Possible solutions to the problem and debt repayment, that are within the Customer credit limit policy with reference to organisational policy.
14. Confirm an agreement on the repayment schedule on the Debt Repayment Plan using the Debt Repayment Plan at Table 3 below.
16. Agree with follow-up actions
18. Close the conversation.

1. a final version of the Debt Repayment Plan to present to your Assessor for marking, together with the Video recording from the meeting.

Table 3 - Debt Repayment Plan

Information	Details
Customer name
Amount owing
No Days in arrears
Specify repayment amount and frequency
Date debt will be repaid
Recommended action
Senior Accountant Approval	Name: Signature:

instruction :

Scenario

You are Peter Crowe, Director of Hurst & Smith Plumbingand your business uses the services ofAzure Beach Accountants and Financial Services and lodge your BAS and IAS statements. Your business agreed to payAzure Beach Accountants and Financial Services within 7 days of receiving an invoice for services they provided to you.

Currently, your organisation's debt toAzure Beach Accountants and Financial Services is overdue with invoices from 90 days, 60 days, and 30 days still outstanding. You have submitted a request for Azure Beach Accountants to for BAS statements for last month, but they have notified you that they will not process your BAS statements until the debt is paid in full.The debt amount is now $2,985.00. Your agreed credit limit with Azure Beach Accountants was $2000.

Azure Beach sent you four reminder letters and when they heard nothing from you, they sent a notice that they may commence legal action to recoup your debt. Your response to that notice had been an abusive call to the Accounts Receivable Clerk.

The Accounts Receivable Clerk (the student), from Azure Beach Accountants has called this meeting with you to try to get you to repay the debt paid immediately or to get you to agree to a repayment plan before any further BAS services are provided.

The conversation should be 5-10 minutes long.

Instructions

The student, playing the role of the Accounts Receivable clerk at Azure Beach has invited you to the meeting and will direct the meeting.

In the meeting, you should apologise to the Accounts Receivable Clerk for the phone call. You are embarrassed and you know that it is not the fault of the clerk that you have not repaid the debt.

You should explain that the reason you are behind in your payment of the invoices is because you have not been paid by your clients, but that is no excuse for not communicating that information to the Accounts Receivable Clerk.

You should state that you don't agree entirely with the list of outstanding invoices because your bank records show that Invoice 0245 was paid within 30 days of receiving the invoice. Show the Clerk the record you have from your Bank Statement.

Record from Hurst & Smith Plumbing Bank Statement

Date	Payee	Description	Transaction ID	Amount
30/01/22	Azure Beach Accountants	Inv 0245 - BAS Dec 21	DBT123846	$995.00

The Accounts Clerk should agree to check that the payment has been received and if it has been received, reconcile your account to $1,990 in arrears.

When the Accounts Receivable Clerk informs you that Azure Beach cannot undertake any work for your organisation until the debt is paid, including your BAS statements and lodgements, you realise that is a problem and you agree that you must pay the debt quickly.

Azure Beach Accountants are saying the total debt so far is $2985.00 and that consists of the following invoices:

• Invoice 0245 90 days ago is $995 - which you can prove has been paid
• Invoice 0321 60 days ago is $995
• Invoice 0433 30 days ago is $995.

Total arrears is $1990 taking the paid invoice into account.

Your BAS statements must be lodged quarterly so you must come to an agreement on a repayment plan., otherwise you will not get your BAS statements lodged on time.You should state that you have been getting on to your own clients to pay their outstanding invoices, so you do want to clear up this issue as soon as possible.

In the meeting you should offer to:

• Pay Invoice 0321 in full within 2 business days
• Pay Invoice 0433 in full within 7 business days
• Pay the next invoice, and all invoices thereafter for the BAS services, within 24 hours of receiving the invoice from Azure Beach Accountants, to build their confidence in your ability to pay for their services.