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What Does "Total Due" Mean?


You have just printed the Collections Report or the Accounts Receivable Report, and, you cannot help but skim to end of the last page, to the row labelled as “Total Due.”  There is a number there, but, in the lockdown era, your customers are not paying.  Your attorney can help you quickly collect what you are owed.


The Pretend Collections Report Versus the Actual Collections Report:  At the time I am writing this, in May 2020, America has been living through over a decade of economic expansion.  The recent experience of most business owners has been that their company will collect most of their bills within a reasonable period of time.  For example, in 2019, manufacturer Caterpillar, Inc. took an average of 62 days to collect receivables, while staffing company Robert Half International, Inc. averaged 50 days.  However, due to COVID19, times have changed, and there is a new reality in commercial collections.

What Does “Total Due” Mean?  Total Due has always been a pretend number.  Total Due is not what your company will actually be paid by its customers.  There has never been a guarantee of payment.  Instead, the Total Due merely shows the maximum your company will collect.  It’s critical to understand that your company will only realize a percentage of the Total Due.  Moreover, Total Due does not delineate a fixed period of time for payment.  In fact the real percentage you will recover decreases as the weeks and months go by.

Each Account Stands on Its Own:  Similarly, there is a total amount due at the end of your account statement for each customer.  This is also a pretend number, merely showing the maximum collection for each account.  For some businesses only a few significant accounts might reflect 20%-50% of an enterprise’s revenue.  Unfortunately, failing to recover on just these few large accounts means that the owners—who are the last to be paid—may never be paid.

Denial:  Some basic psychology applies in many business and legal situations.  Denial is an immutable fact of the human condition, which impacts our ability to reach objective decisions and make tough choices.  However, denial can be a risky proposition in an unforgiving business environment.  When a creditor accepts Total Due as a real number, the creditor is postponing the reckoning, which only helps the debtor.


Reality:  The reality is that the unpaid creditor is financing the debtor.  In effect, the creditor becomes a banker, relying upon Total Due as a form of security in extending a loan to a debtor who may not be able to obtain credit from a real bank.  In addition, because the creditor has paid its own expenses, it is financing the delinquency, often via a high-interest credit line. 

The Best Friend Test:  When the debtor pushes you off every month with fake promises to follow-up and get back to you later, think about what you would do if your best friend asked for advice on how to handle delinquent accounts.  What would you advise?  Would you tell your best friend to rely upon a seriously past-due receivable?  Would you tell your best friend to continue to provide services to an insolvent customer?  Probably not. 

Litigation Within 120 Days:  A company which is more than 90 days past due in paying its bills is technically insolvent.  Our office recommends litigation of accounts receivable which are 120-days past due.  The debtor is often more afraid of litigation than the creditor, and therefore, decisive action usually yields results. 

Conclusion.  Speedy collection of accounts receivable is crucial to business success.  If the debtor fails to pay, your company should quickly initiate legal action.

Nathan Wirtschafter, Esq. is a California business trial attorney.  His law practice encompasses a broad range of business matters, including business litigation and business collection.  The firm represents clients in state and federal courts, arbitration and mediation.  He can be reached at (818) 660-2518 and

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The "Total Due" on your company's Collection Report diminishes as the weeks and months go by. 


Failing to recover only a few significant accounts means that the owners--who are the last to be paid--may never be paid.  

Even in the lockdown era, with help from your attorney, you can collect unpaid bills.

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