Bad debt - Definition

A bad debt is an Amount that is irrecoverable by the business and is classified as an expense because the debt owed to the business is unable to be collected. This usually occurs when the debtor has declared bankruptcy or the cost of pursuing further Action in an attempt to collect the debt exceeds the debt itself.

In short, if someone owes you money that you cannot collect, you may have a bad debt.

There are two kinds of bad debts: business and non-business. A business bad debt is one that comes from operating your business, like, Loans to clients or suppliers etc. All other bad debts are non-business.

Terms near "Bad debt"

Bad debt reserve
Balance of payments
Balance of Trade
Balance Sheet
Bank Credit
Bank Line
Bank of England
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