Vinu: Manu, what is this Book Debt Statement that businesses submit to banks? I came across this term in a loan document.

Manu: Good question, Vinu. A Book Debt Statement is a list of amounts receivable from customers — basically, unpaid invoices — that a business submits to the bank. It shows how much money is expected to come in from customers.

Vinu: But why do banks ask for this?

Manu: That’s because many businesses take working capital loans like Cash Credit (CC) or Overdraft (OD) by pledging their receivables — the money they expect to receive from their customers. The bank needs to see what book debts are available as security and whether they’re current or overdue.

Vinu: So the bank treats my customers' dues as collateral?

Manu: Exactly. But the bank doesn’t consider all receivables. It only considers the ones that are not too old — typically, less than 90 days.

Vinu: Oh! So what’s included in the statement?

Manu: The statement will have details like:

Vinu: Can you show me with an example?

Manu: Sure. Suppose your receivables are ₹12 lakhs in total, but ₹2 lakhs are overdue for more than 90 days. So, only ₹10 lakhs are eligible.

Vinu: That makes sense. How often do I need to give this statement?

Manu: Most banks ask for it monthly or fortnightly, depending on your agreement. And they might also verify it with your sales ledger, GST returns, or even during audits.

Vinu: And what happens if most of my receivables are old?

Manu: Then your Drawing Power reduces, because the bank will not consider old or doubtful debts. So it’s important to keep your receivables fresh and collected quickly.

Vinu: That’s really helpful, Manu. Now I understand why managing receivables is not just about cash flow but also about keeping the bank limits usable.

Manu: Spot on, Vinu. Keeping your books clean helps with both cash flow and bank funding!