Bad debt

How it is used

Bad debts are written off and recorded as an expense. Before that stage, amounts at risk are usually covered by an allowance for doubtful debts.

Example sentences

1. After the customer went into liquidation, we treated the balance as a bad debt.

2. Bad debt expense was unusually high this year.

Common collocations

• write off a bad debt
• bad debt expense
• doubtful debts
• allowance for doubtful accounts

Related terms

• accounts receivableMoney that customers owe a company for goods or services it has already delivered on credit, and also the team that collects those payments.
• write offTo remove an asset, such as an unpaid receivable or damaged stock, from the books because it no longer has value, recording the loss as an expense.
• provisionA liability recorded for an expected future cost whose exact amount or timing is uncertain, such as a lawsuit, warranty claims or restructuring.
• impairmentA fall in the value of an asset below the amount shown in the books, recorded as a loss so that the asset is not overstated.

More terms: Invoices & Payments

• invoice
• accounts payable
• receipt
• purchase order
• credit note
• payment terms
• due date