Bad debt expense represents the actual amount of accounts receivable deemed uncollectible and written off during a period. Conversely, the allowance for doubtful accounts is a contra-asset account that estimates the portion of accounts receivable that may become uncollectible in the future. While bad debt expense reflects realized losses, the allowance for doubtful accounts anticipates potential losses and is reported on the balance sheet.
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Enterprise Receivables Management System to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.
