Causes of a bad debt
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Causes of a bad debt
There are numerous causes as to why a credit customer or trade receivable could become a bad debt or irrecoverable debt. One cause could be where the customer may go bankrupt, in other words, they might not have any money left in their bank account to be able to pay back the debt. Another cause is where there might be a dispute relating to the delivery of goods. There could be a disagreement about the standard of service. Another cause of bad debts or irrecoverable debts could be where a business could be a victim of a fraud or a scam. And the final cause of a bad debt or irrecoverable debts could be where the debt may be too small to pursue in the legal system.
