FNSBKG403: Report on Establishing and Maintaining Accrual System

This report, addressing the FNSBKG403 unit, details the establishment and maintenance of an accrual accounting system, focusing on debt management. It begins with an overview of bad debts and includes a series of communications: a request letter, a reminder letter, and a final notice to a debtor, CuppaChino Coffee Shop. A debt recovery procedure is outlined, followed by strategies presented to a trainer. The report further includes communications between the manager and the client, detailing payment options, and the client's response, which outlines a payment plan. The report emphasizes the importance of timely payments and outlines steps to be taken if the client fails to adhere to the agreed-upon plan, including potential legal action. The report showcases the process of handling overdue accounts, from initial contact to potential legal recourse.

FNSBKG403
(Establish and Maintain an Accrual
Accounting System)

Table of Contents
ASSESSMENT TASK 2.................................................................................................................1
1. Bad debts..................................................................................................................................1
2. Request letter............................................................................................................................1
3. Remind letter...........................................................................................................................2
4. Debt recovery procedure..........................................................................................................2
5. Final notice...............................................................................................................................3
ASSESSMENT TASK 3.................................................................................................................3
A. Manager...................................................................................................................................3
B. Client.......................................................................................................................................4
C. Client response........................................................................................................................5

ASSESSMENT TASK 2
1. Bad debts
To, Accountant
From: manager
Subject: Concerns over bad debts accounts
Hello!
The key aim of writing this mail is to seek appropriate advices and suggestions regarding
our debtor management concerns. As per our organization credit policy, we granted a credit of
30 days to all of our consumers so as to provide them convenient payment facilities. Respecting
our policy, all the consumers had paid the money within the credit period except only one
debtors, CuppaChino Coffee Shop whose account balance has been overdue by 60 days.
Although, company had took all the necessary steps so as to contact the business owner, still,
they did not respond it. It questioned the credit position of the party and it is likely that the
account may be going to turn into the bad debts. It seems a serious business concerns which may
resultant loss in the future. I request that please pay attention to our concerns and advice us so
that we can collect the amount owing from the outstanding debtors.
2. Request letter
To: CuppaChino Coffee Shop’s owner
From: Manager of Tei’s Tea
Subject: Request for Outstanding payment
Hello!
Our company respects all of our consumers and to facilitate them, we provide credit
facilities so that every product user can purchase goods on credit and make payment
conveniently but within the granted credit period. You are one of our reliable consumers as our
company is serving you from a long period and maintained good relationship also. According to
our debtor’s policy, company grants credit for the period of one month to all the receivables. As
per this, all the debtors have to make payment within the mentioned time period and you always
followed the same. However, your account has been overdue by 2 month. I request that kindly
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clear all your account balances, so that, company can maintain good relationship with you and
serve you in the future also.
Thanks!
3. Remind letter
To: CuppaChino Coffee Shop’s owner
From: Tei’s Tea, Manager
Subject: Remind letter
Hello!
This letter is just to remind you that in the earlier, we have contacted you many time to
draw you attention for the payment of outstanding account balance, still, neither you make fully
or partly payment of outstanding balance nor you have responded it. As a result, your account
balance has been overdue by 60 days which can results in liquidity concerns for the company.
So, we politely request that kindly clear your amount owing so that we can continue our
relationship for a prolonged period and serve you with the best products and services.
Thanks!
4. Debt recovery procedure
To: Accountant
From: Tei’s Tea, Manager
Subject: Debt recovery procedure
Hello!
According to our current receivable balance, one debtor, CuppaChino Coffee Shop is
overdue by 2 month. Although we have sent the party a request letter and remind letter, still,
neither they replied nor paid the credit amount. It may raise financial concerns for the company
and threaten the cash position also. Henceforth, kindly take necessary actions to recover the due
payment from the trade receivable. Moreover, suggest us some commendable solutions about
what actions do we need to take to tackle such issue so as to receipts the money as early as
possible.
Thanks!
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5. Final notice
To: CuppaChino Coffee Shop’s owner
From: Tei’s Tea, Manager
Subject: Final notice
Hello!
As we have taken all the necessary attempts repeatedly to contact you and requested also to
make payment promptly, still, till date, you did not cleared your account. This is the last time; we
are writing this letter respecting your goodwill to inform that if you still did not make payment
within a week, then our company will take serious legal actions to recover the debts. Drawing
you attention into this, we may issue default notice or go to the court claiming for the
outstanding payment on your company which will create an adverse impact on your business
goodwill and creditworthiness due to the litigation process. We can also lodge complaint to
ASIC and ACCC along with the necessary evidence by sending a copy of the request for
payment and remind letters which were send to you earlier. So, pay your attention and make
payment on time so as to avoid any legal complexities and threatening issues
Thanks!
ASSESSMENT TASK 3
A. Manager
To: Trainer, Tei’s Tea
Date: 14th September 2017
Subject: Recovering outstanding debts
Hello!
According to our credit collection policy, we extend credit of 30 days for all of our respected
consumers. However, according to the current account situation, there is only one debtor to
whom many letters including request for payment, remind letter and final notice have been send
to the party, but sill, payment has not been made yet. Reflecting to the current decision, we have
planned following debt recovery strategies for recovering due balance and minimize the
possibility of turning the account into bad debts:
 Receive payments within two equal monthly installments (50%) without any extra
interest
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 Receive payments within 3 even monthly installments with 10% interest.
We seeks your kind approval on the same, so that, the strategies can be conveyed to the
client to recover unpaid debts, still, if it does not work then we will file a legal case in the court
so as to charge upon the client for the due payment
B. Client
To: CuppaChino Coffee Shop’s owner
Date: 14th September 2017
Subject: Recovering outstanding debts
Dear customer,
Account detail summary
Date of invoice: 10/05/2012
Invoice number: 744
Item purchased Qty Unit price Amount
Double bed 1 2200 2200
Double sheet 1 55 55
Fluffy Pillow 2 55 110
Total 2,365
GST included 215
Reviewing company’s policy, we extended credit limit by 30 days whereas as per the current
account status, your balance is overdue by 60 days which is a serious concern for the firm.
Despite our request and remind letters, the above stated price of 2,365 is still unpaid to date.
Although, we value your respect, market position and goodwill but with regret, we are not able
to supplying more goods and services to you on credit till the time, you did not pay unpaid
balance. If you have any issue regarding the quality of goods supplied then we invite to contact
us so that the issue can be resolved immediately. Otherwise, if you are experiencing any
financial hardship and not able to make payment within the given notice then, we are also ready
for the below mentioned alternative arrangement so that your account can come back to the
normal supply as early as possible.
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 We are ready to receive payments within two equal monthly installments (50%) in to
make the payment more feasible and convenient at no extra interest.
 You are also allowed to make payment within 3 even monthly installments with 10%
interest.
We will definitely appreciate you by receiving the payment of above stated outstanding
balance within the given time-frame. Moreover, if you have any difficulties then kindly inform
us the preferable convenient agreement or payment plan.
Still, If neither you respond nor pay money by the given dates than we can sought legal
case and this invoice will be handed over to our solicitor or debt collection agency that will have
a drastic impact on your credit rating. Hence, we urge to contact us on the immediate point and
arrange alternative payment before the date.
C. Client response
To: Manager, Tei’s Tea
Date: 14th September 2017
Subject: Debt recovery plan
Hello, Respected manager
After receiving the client’s response, it is now identified that client is experiencing several
financial difficulties, so he conveyed us that he is unable to make full payment on a given date.
He questioned for the partly payment in installment and after the mutual discussion, we opined
the first alternative strategy as a better payment option for him wherein he is ready to make
payment in two equal monthly installment without any extra interest burden. Therefore, it is
decided that party will make first payment worth 1183 in the next month and rest 1182 in the
following month on the ending date. The accounts will be monitored and administrated and still,
if debtor breach or violate the decided payment plan, then on an immediate effect, strict legal
action will be taken against party by sending the letter of demand to the debt collection agency
solicitor so as to claim for receipts of unpaid debts.
Sincerely thanks!
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