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Bad Debt

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Bad Debt

Bad Debt is that amount of money that has been lent to a person, but can no more be recovered because either the debtor has become bankrupt or has some financial inability to pay or it cannot be collected due to some other reasons.

In business, it occurs from the sales made in credit. Businesses are supposed to allow for bad debts. They are even expected to consider a certain percentage of their total credit sales to be bad debts and record this amount in their allowance of doubtful accounts which is also called provision for credit losses.

The allowance of doubtful accounts is a measure used by businesses to determine how much bad debt they expect to encounter. This helps them manage their cash flow and finances and allows them to plan for losses. It also helps them to better manage their accounts receivable.

Methods to Know Bad Debts

1. Direct Write-Off Method

In this method, the amount that is not expected to be collected are directly written off and charged to the income statement. This method violates the matching principle of accrual concept that is used in accounting and GAAP (Generally Accepted Accounting Principles). According to this principle, a transaction should be recorded only when the transaction occurs avoiding the time of occurrence of the cash transfer.

This method is basically followed for income tax purposes as the Internal Revenue Service (IRS) allows all the debts that earlier have been reported as an income.

2. Allowance Method

No business can know beforehand that which credit sale will be a bad debt or which can be recovered. Therefore, in this method, an allowance for credit losses is created based on the predictive and approximate figures. This allowance is then used by the businesses to adjust the receivable accounts. This method follows the accrual concept of accounting.

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CashAmericaToday is registered with the Utah Department of Financial Institutions to offer consumer credit services. When you submit your application to us online, it will be processed just as if you had submitted it in person, establishing Utah as the jurisdiction for the negotiation, execution, and fulfillment of all applications and agreements. If your application is approved, the funds will be disbursed from our account in Utah. Please note that Utah's laws governing consumer loan agreements may differ from those of your home state. It is the applicant's responsibility to adhere to all statutory requirements related to obtaining internet loans in their state of residence. Please be aware that this service may or may not be available in your specific state, and loans are not offered in the state of Michigan.

CashAmericaToday is a brand of Silver Financial Capital. The purpose is to meet your short-term borrowing needs, not long-term financial needs. Please note that this is an expensive form of borrowing. The loans and lines of credit may be used for whatever reason you need, like unexpected emergencies, car repairs, medical bills, or travel expenses. In addition, alternative forms of financing like credit card cash advances, personal loans, and home equity lines of credit might be more affordable and better suited to your needs.

CashAmericaToday does not perform any credit checks through the three major credit bureaus Experian, Equifax or TransUnion. We collect required information regarding debtors' creditworthiness from a third party source.

Approval time depends on the authenticity and verifiability of your documents. You might be requested to provide further information if required. Note that we do not approve all the loan requests. On the basis of state laws and your repayment ability, the terms and rates may vary. Any loan requested on Friday after 6:00 PM CST will be processed on the next business day, usually Monday- unless it is a holiday.

Should you have any doubts, please call our customer support at (855) 840-5688, Monday- Friday: 7:00 AM to 4:30 PM (CST) or email to support@cashamericatoday.com.

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