Accounts Uncollectible

Accounts uncollectible, also known as uncollectible accounts or bad debts is an accounting term for unpaid customer bills. The credit sales in accounts receivable which are unexpected to be collected from a customer is accounts uncollectible. It is also used in the valuation of accounts receivable on the balance sheet of an organization.

Tracking these bad debts is crucial as it qualify as write-off expenses for the company. An accounts receivable automation software is used by companies to optimize credit and collections management, as well as identify and track accounts uncollectible when they occur, and optimize all customer invoices.

Bankruptcy, Defective product, Liquidity issues, Bogus sales and Loose credit policy are some of the commonly occurring reasons for balances left unpaid when customer refuses to pay or stops communication.

Direct write-off and Allowance method are two main methods used to help organizations account for unpaid receivables and regain lost revenue.

Worthless assets, Bankruptcy, Less cash flow, Losing investors and Overstated revenue are some risks to be wary of since unpaid debts can harm the growth of organization in current and future quarters.

You can do a thorough credit checks before offering credit, offer small discounts for early payments, stop offering credit to customers with past due bills, send customers a notification as a reminder when bills are nearing their due date and estimate accounts uncollectible to protect your business against uncollectible accounts.