Bad Debt and the Allowance for Doubtful Accounts
Written by Harry Prabandham
Curated by Rubric Financial
Last updated
1 / 5
Why Bad Debt Exists
- Some customers who owe you money will never pay, whether from churn, disputes, or insolvency.
- Recognizing revenue on an invoice does not guarantee the cash will ever arrive.
- Bad debt is the portion of your receivables you realistically expect to lose.
- Ignoring it overstates both your assets and your reported financial health.
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About the author
Harry PrabandhamFounder & CEO
Founder and CEO of StartupCFO. MBA from Wharton, MS in Computer Science, and decades of experience building and advising venture-backed startups.
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