Bad debt

Meaning

A bad debt occurs when a company’s customers are unable to pay all or part of the amount owed, often due to factors such as bankruptcy.

Key points

• Bad debt appears frequently in invoicing, payment handling, and bookkeeping workflows.
• The term improves clarity between clients, suppliers, and accounting teams.
• Consistent use supports cleaner documentation and better reporting quality.

Practical use

In Nexbal workflows, bad debt is used to keep invoice and payment operations structured and auditable.