allowance for doubtful accounts

(redirected from Provisions for Bad Debts)

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 ?
- EBITDA gradually increasing to EUR93 million in 2022 (after provisions for bad debts), assuming no impact from the gas tenders
The bank had reported increasing non-performing loans and has been increasing provisions for bad debts.
Alpha Bank, Greece's fourth-largest lender by assets, swung to a loss in the final quarter of 2015 after it more than doubled its provisions for bad debts.
CO-OP BANKS on Monday announced a e1/441.2 million net profit for 2014 despite the rise in provisions for bad debts. Total provisions reached e1/42.97 billion.
Top bankers attributed the robust performance to strong economic growth and lower provisions for bad debts, however they caution over potential 'external shocks' to the industry due to lower oil prices and volatile global economy.
The bank attributed the decline in profit to more normal levels of provisions for bad debts which started from the last quarter in 2013.
The current economic climate has also resulted in the need for additional provisions for bad debts.
Provisions for bad debts also fell by 29% to PS2bn.
The 15-percent state-owned bank, whose provisions for bad debts fell 11 percent to a still-high 1.72 billion euros last year, said it expects impairment charges to continue to reduce as the Irish economy recovers.
Provisions for bad debts rose to AUD545m in the first fiscal quarter from AUD493m in the same period of the prior year largely due to the bank's underperforming UK business.
down to 3.90 Dirhams (US$ 0.90), following indications from Emirates NBD management that inflated provisions for bad debts may be required.

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