Uncollectible Account

Uncollectible account

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

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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 bankrupcty, the company writes off the amount lost as bad debt. This reduces the company's revenue, but also reduces its taxable income.