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Uncollectible Account
(redirected from Uncollectible Accounts)

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Uncollectible account
An account which cannot be collected by a company because the customer is not able to pay or is unwilling to pay.

Uncollectible Account
Accounts receivable that a company cannot collect because the client is unable or unwilling to pay. If the client is simply unwilling to pay, the company can sue to collect what is owed; however, this incurs its own expenses and may not be worth the effort. If the client is unable to pay, for instance because of bankruptcy, the company writes off the amount lost as bad debt. This reduces the company's revenue, but also reduces its taxable income.


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These increases were offset by higher operating and maintenance costs including storm-related repairs, increased reserves for uncollectible accounts and increased transmission costs and by the writedown of The Energy Network's South Glens Falls generating facility in the fourth quarter of 2005.
Let's take the company earning 10% pre-tax return on annual sales of $1 million with a 5% uncollectible accounts rate and average A/R balance of $100,000.
The company's fourth quarter EBITDA, excluding impairment of assets and other charges as well as the additional provisions for benefit related costs and uncollectible accounts receivable, was $49.
 
 
 
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