Charge-Off
Charge-Off is the declaration by a creditor that an amount of debt is unlikely to be collected, indicating that it is considered "bad debt" and written off the books.
Benefits
Charge-offs help companies clean their books. They remove unlikely-to-be-paid debts, making financial health clearer.
Frequently Asked Questions
What is a charge-off by a creditor?
A charge-off is when a creditor decides a debt won`t be paid. They mark it as bad debt and remove it from their accounts.
What does it mean when bad debt is written off?
Writing off bad debt means a company decides a debt won`t be paid. They remove it from their financial records.
Is bad debts written off and bad debts recovered the same?
No, they`re not the same. Bad debts written off are considered lost. Bad debts recovered are when a company gets payment for a debt they thought was lost.
Key Takeaway
Charge-offs let businesses focus on the money they can collect. It`s a way to clear up finances and move on from unpaid debts.