Think of receivables as loan to your clients, you have to figure out if you are going to collect on that debt, or you may write-off the amount on the client account. Review your accounts receivables on a quarterly basis. First, hopefully you have been billing your clients regularly, so that they know to pay you. Second, review your client balances and determine if some tiny amounts should be written because are deemed uncollectible or insignificant.
Next, invoice all your clients with unpaid balances. It is better and clearer to send a remainder invoice for an unpaid invoices separately and not lump it in with the latest billing.
This way, the clients know exactly what needs to be paid, and since it is past due, include wording in the invoice that the payment is due immediately.
Write-Off. You should write off only when necessary. Collection agencies can be expensive, but persuasive communication with the clients may actually pay off. Let them know that your client relationship is important and can work with them on partial payments to get down to a zero balance.
If you do write-off, set up a reserve for bad debt expense. Depending on the industry, the percentage can a small percentage (2-3%). If the bad debt reserve is accurately estimated, then your company’s net income will not be reduced when the debts are actually written off as being uncollectable.