Bad debts are not good for a business. Sometimes, you may have followed all the steps to prevent cash flow problems andlate payment, but you can still be impacted by non-payment. When a customer defaults on its bills or is in danger of doing so, the company extending credit to that customer faces a bad debt expense. The bad debt expense must be charged against your company's accounts receivable and consequently reduces the amount of accounts receivable on your company’s income statement.
Bad debt expense can be detrimental to a business’s long-term success, but fortunately there are ways to manage this expense and mitigate bad debt-related risks.
Here are some articles that may help you:
