What are Bad Debts and How to Prevent Bad Debts?

WHAT ARE BAD DEBTS AND HOW TO PREVENT BAD DEBTS?

What actually is Bad Debt?

The fi rst q u e st ion t ha t come s t o mind is Wha t ac tu all y is t hi s bad deb t ? So as al r ead y t he w o r d " BAD " is added he r e , i t mean s s ome t hing t ha t is no t good .

Acco r ding t o t he e x pe rts , t he t e r m bad deb ts ty picall y s ho ws t o r eco r d s of sales ( o r e x change mone y due) t ha t w on ' t be collec t ed . Ho w e v e r , t he effec t of bad deb ts can like w i s e r efe r t o no t e s r ecei v able t ha t w on ' t be collec t ed .

Are Bad Debts Harmful?

A s pe r t he e x pe rts , t he effec t of bad deb ts is v e ry ha r mf u l t o t he b us ine ss .

S u ppo s e y o u ha v e a la r ge n u mbe r of bad deb ts , t hen y o u r eall y need t o make a s peed y mo v e and g u a r an t ee t ha t y o ur account receivable process is being managed adeq u a t el y . No do u b t , t he effec t of bad deb ts a r e t o x ic t o y o ur b us ine ss .

Tips to Achieve a State of Zero Bad Debts:

0 1

Take Calculated Risks

02

Define Y o ur Payment Terms

03

Use A Collection Service

04

Treat Each Case As Separate

05

Financial Repo rts Analyzing

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