Accounting

    Bad debt

    An invoice unlikely to ever be collected and written off the books.

    Definition

    Typical threshold: 120+ days past due with no customer response. Bad debt is deductible against income for cash-basis businesses only when the cash was previously recorded as income.

    Related terms

    Accounts receivable (AR)

    Money customers owe you for invoiced but unpaid work.

    Aging report

    A summary of unpaid invoices grouped by how overdue they are.

    Write-off

    Removing an asset, expense, or uncollectible debt from the books.