Bottom of portfolio management

What is Bottom of Portfolio Management?

The majority of companies work their balance by descending from top to bottom. However, the management of small unpaid debts often poses a problem due to the management cost and the tax impacts linked to the passage of debts.

The problems encountered in the management of small unpaid debts

1. A high management cost : small notes not recovered pollute the accounts and increase administrative charges.
2. A tax impact not to be overlooked :
   • The loss of a claim requires proof in accordance with article 272 of the general tax code.
   • In the event of tax audit, the company must prove that it has tried to recover unpaid claims. Otherwise, the taxman can refuse the passage in loss and reintegrate the claim in turnover.

Fiscal consequences of non-centers

1. VAT on irrevocable receivables
   • Statutory auditors (CAC) and tax administration may require evidence of collection actions.
   • Without proof of loss passage, the taxman can claim the reimbursement of VAT, even if the claim is definitively lost.
2. Impact on corporate tax (IS)
   • The loss of a claim decreases the taxable turnover and therefore the amount of the IS.
   • During a tax audit, the absence of supporting documents can lead to the reinstatement of these amounts in turnover, with a tax recovery.

How to optimize portfolio management?

Today, these receivables cost you 100 % if they are not effectively managed.

Paris International Litigation supports you in optimizing the collection of receivables in:

• Recovering funds when possible.
• Providing a non-covered certificate , thus allowing a passage in accordance with tax requirements .

By outsourcing the management of unpaid debts, you secure your tax deduction of irrecoverable receivables and reduce the cost of managing small receivables, while protecting your business from tax risks linked to ill -treatment.