There's an understandable emotional resistance to giving up on a debt: it's money the company earned and never got. But every hour spent chasing a sum that isn't coming in is an hour not spent collecting what's still recoverable.
The odds fall with time
This is the fact that should shape priorities the most, and the one least often discussed: the probability of collecting a debt drops sharply with its age. An invoice thirty days overdue is almost always recoverable. At six months, the success rate is a fraction of that. After a year, it's marginal.
The practical consequence is simple: effort should concentrate on what's recently overdue, not on the old case that's the most annoying.
The signs it's not coming in
- Payment promises broken more than twice in a row.
- No response across multiple contact channels.
- Public information about insolvency or ongoing proceedings.
- A dispute over the debt that only appears after you start pressing, not at the time of delivery.
This last one is particularly telling: a legitimate complaint shows up when the service is delivered, not six months later, once someone starts pushing.
The options before writing it off
A written payment plan. For a client in genuine difficulty but with real intent, this has the best recovery rate. It should be written, with amounts and dates, and the first instalment should be immediate — if that one fails, the rest will too.
A discounted settlement. Getting 70% now is usually worth more than a theoretical 100% two years from now, and it frees up the team's attention immediately.
Legal action or a court injunction. Makes sense above certain amounts and when there's solid documentation. Below a certain threshold, the costs and time eat up what's recovered.
Closing the case formally
Once the decision is made to stop chasing, it should be recorded: amount, date, reason, and who decided. This serves three purposes — getting the correct accounting and tax treatment with your accountant, clearing dead cases off the collections list, and letting you analyse the pattern after a year.
What the analysis reveals
Done annually, the bad-debt list usually shows an uncomfortable but useful pattern: the same type of client, the same type of project, the same warning sign ignored at the start.
It's information worth more than the amount lost, because it changes client-acceptance criteria — and because it almost always confirms the problem was visible at the first delay, when it was still cheap to act.