When we say debt we see future which we don’t see really. We plan recovery of something we need presently but couldn’t have it and still cannot afford to lose it altogether. As the time proceeds and chances of recovery weaken a new expense start figuring out in the account books against the old one, the bad debt expense.

In modern business world when no transaction remains free of this, the bad debt expense is much more than significant. The grass is always greener at the other side of the road. Every business establishment finds its bad debt expense more than any other in the world. Another way to say this is some debts are bad at some places and some time with some business establishment but are not so otherwise. For some companies which rely much on human resources that is where business is labour oriented bad debt expenses find their major proportion from the unpaid loans company has from its employees.

Marketing agencies, services units, transport facilities etc. find the credit provisions to their clients turning bad when the client generally doesn’t pay on account of its own business failure in the particular transaction. So one cannot figure out the exact nature of bad debts. The only thing worth doing in this regard is finding ways to minimize them and keeping provisions in the annual budget regading them after a good deal of research.