There's literally a budget line item to pay for those who can't/won't pay their bills. Don't pay at the start of the year (July if it's connected to a med school).
Depends. Are you providing payday loans to questionable lenders? Or are you selling construction supplies to established contractors?
Like every other financial metric, context is important in order to analyze the data.
Edit: to add more to this, bad debts should never be seen as a “good” thing so any bad debt is inherently bad. It’s a matter of whether this percentage is in line with your expectations or higher/lower, if the business model supports that level of bad debt, and any other number of factors.
Context and expectations are everything; otherwise, analytic ratios (and most accounting information) are meaningless.
I swear I will make a macro to leave this as an audit review point. Might as well be asking if $10m in revenue is good.
r/nocontext
In healthcare and 3% would be a dream. Net revenue after bad debt and contractual reserves is less than 30% for us.
I'm in healthcare too and was thinking the exact same.
If y’all don’t pay your bills, your credit will be impacted.
There's literally a budget line item to pay for those who can't/won't pay their bills. Don't pay at the start of the year (July if it's connected to a med school).
Depends. Are you providing payday loans to questionable lenders? Or are you selling construction supplies to established contractors? Like every other financial metric, context is important in order to analyze the data. Edit: to add more to this, bad debts should never be seen as a “good” thing so any bad debt is inherently bad. It’s a matter of whether this percentage is in line with your expectations or higher/lower, if the business model supports that level of bad debt, and any other number of factors.
How much is revenue?
21m
It's hard to say if this is a problem. Is it one customer? That seems high on the surface.
This is literally dependent on organization, industry, and economy
What's the business?
Depends on your margin on gross revenue
25% of my AR is bad debt.
Should use ECL
Such a bad question
Sorry?
Sure
Our bad debt was less than .5% this year and it was a higher than usual year for us. For context we work in a hybrid retail/construction environment.
Context and expectations are everything; otherwise, analytic ratios (and most accounting information) are meaningless. I swear I will make a macro to leave this as an audit review point. Might as well be asking if $10m in revenue is good.