How do bad debts impact accounts receivable management?

Question

I don't know what category to put this but this an important question for my accounting synthesis subject.

Comments

Can you elaborate & be more specific on your question? what is the point of interest in terms of IFRS here?

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I just want to know what is the effect or impact of bad debts in a/r management that's all.

Answer 1

Bad debts reduce the accounts receivables. It is a loss for the company to incur bad debs. Therefore it is important to evaluate customers' creditworthiness before offering credit sales. Also debt collectors need to put more effort to reduce bad debts.

Answer 2

Debt recovery is all about the effort on debt collection. You need to follow up the debtors as frequently as possible.

Answer 3

Cash is the king for any business. If your debtors convert into money as expected, it may lead to a total business failure.