If you use a back-office system to reconcile your income, you’ll have the ability to pull off an aged-debt report. Do you know whether yours is accurate? Do you even look at it?

At the end of each income period, your aged debt is the money owed to you which should have already been paid.

Let’s look at how to get the aged-debt figure as accurate as possible:

Dates

For provider paid income, the correct expectation date is critical. It’s the date you expect to be paid, not the date you submit the business, or add the expectation to the system, or even the date any ongoing income is calculated.  It’s not aged debt until the provider fails to transfer funds to you by the date it was expected. And if you receive payment quarterly, for example, the expectation should also be quarterly, not monthly.

Plan status

Make sure plan changes are accurately reflected in the income screen. Policies no longer on risk should have the income expectation stopped from the relevant month.

Funds under management

Ensure your price feeds are up and running. The more accurate your funds under management, the more accurate will be the expectation and the more likely the income will auto-match within tolerance (see below).

Tolerances

Make sure your tolerances are set at a reasonable level, to increase the probability of an automatic match. Entries that are manually matched run the risk of accidently not being written-off . That 2p difference on an OAC payment forms part of your aged-debt report!

Regular analysis

Review the aged-debt report monthly, and address the entries. Look out for:

– those entries where the write-off hasn’t taken place (mentioned above)

– duplicated entries because an error was made on the original and a correct entry has been added without cancelling the incorrect one

– missed payments because there is no available cash in the plan

– incorrect payment types. These get left unmatched whilst the correct payment is auto created and matched

– 50% under-payments or 100% over-payments – indicating either the provider is paying on an incorrect rate, or the expectation has been added incorrectly.

Administration processes

Finally, we recommend that, as part of your new business administration process, you add a diary entry to check that requested ongoing income starts to be paid. The first month may be a part payment, so you will need to wait for the second month’s payment to check it has been set up on the correct basis. And for those plans where an automatic sell-down of funds isn’t possible, we recommend you factor in quarterly or half yearly internal reviews to ensure sufficient cash funds are available to pay your ongoing adviser charges.

At Adviser Outsourcing we can help you get on top of your aged-debt, and keep you there. Contact us to find out how.