allowance for doubtful accounts

(redirected from Bad Debt Provisions)

Allowance for Doubtful Accounts

Extra funds from sales, or another source, set aside in order to pay off bad debt if and when it arises. The allowance helps a company ward off any potential cash flow problems should its credit sales not be repaid as expected. On financial statements, it is important to note that an allowance for bad debts exists for fiscal conservatism and not because one expects a large amount of bad debt to accumulate. An allowance for doubtful accounts is also called a cushion. Banks call these funds the loan loss reserve. See also: Savings account.

allowance for doubtful accounts

A balance-sheet account established to offset expected bad debts. If a firm has made a sufficient provision in its allowance for doubtful accounts, reported earnings will not be penalized by bad debts when the bad debts occur. If uncollectible accounts are larger than expected, however, the firm will have to increase the size of the account and reduce reported income. Also called allowance for bad debts, reserve for bad debts.
References in periodicals archive ?
The firm said that a sharp drop in bad debt provisions helped balance a decline in lending and fee revenue.
8 percent as the bluechip bank said a tight rein on costs lower bad debt provisions and the strong consequences in Asia mean it predicts full-year revenue at the lower close of the 4.
05 per diluted share) for bad debt provisions in Latin America and USD7m (USD0.
1 billion gain from disposals aided earnings as did a halving of bad debt provisions to $1.
It is the second warning from Aggreko in as many months after it said in October that unfavourable currency movements and an increase in bad debt provisions would affect results for this year.
But it warned that results were being impacted by unfavourable currency movements and as bad debt provisions increased.
Greek banks are trying to cope with rising bad debt provisions and a shrinking deposit base as the austerity-hit country struggles through its fourth straight year of economic contraction.
Sorouh Real Estate reported a four-fold surge in second-quarter net profit as Abu Dhabi's second largest property developer handed over more units and saw a sharp drop in bad debt provisions, but the results missed analysts' forecasts.
The bank, considered to be the fourth-largest lender in Greece, has reported a loss because of an increase in its bad debt provisions.
The downgrade action was precipitated by a combination of a sharp slowdown in trading activity, significant bad debt provisions and rapidly escalating operating expenses.
Total operating costs, excluding bad debt provisions, were EUR8.
The result was burdened by bad debt provisions of EUR 1.