We calculate the amount of our doubtful provision based on two factors:
* A general provision based on our aging report (e.g. ##% of AR 1-30 days late, ##% of AR 31-60 days late, ##% of AR 61-90 days late, etc. - with the percentage amounts increasing as the invoices are older)
* A specific provision for special cases where we think we might not get paid, but we are still trying (e.g. bankrupcties, invoices at collection agency)
If this isn't what you're looking for, could you please clarify your question? Thanks!
Not sure exactly what question is...
but you can also use AR receipts write off bad debts hitting the bad debt expense GL account (or whatever accounts you want to use) by setting up AAIs & UCD setup.
The provision for bad debts might refer to the balance sheet account also known as the Allowance for Bad Debts, Allowance for Doubtful Accounts, or Allowance for Uncollectible Accounts. In this case Provision for Bad Debts is a contra asset account (an asset account with a credit balance). It is used along with the account Accounts Receivable in order to report the net realizable value of the accounts receivable.
Provision for Bad Debts might also be an the income statement account also known as Bad Debt Expense or Uncollectible Account Expense. In this situation, the Provision for Bad Debts reports the credit losses that pertain to the period shown on the income statement.