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Bookkeepers for small businesses in Sydney explain what a bad debt reserve is

Not many people will know what a bad debt reserve is, as it is more of an unspoken topic when looking at your business’ accounts. A bad debt reserve is also known as loss revenue. Our bookkeepers for small businesses in Sydney will explain what bad debt reserves are so you’re more prepared to run your business.

Our small business bookkeepers in Sydney define a bad debt reserve as: It is an account, which a company sets aside for offset loses that arises as a result of defaults from future loans.

Bad debt reserves have a limit before their breaking point and this figure is calculated from the historical norms or information about the safety of the debt. If this bad debt reserve is reached, there are concerns that it has the ability to cause an aftereffect that can last for years. To avoid this aftereffect, a small investment in small business bookkeeping in Sydney to manage your accounts would be vital!

Feel free to contact our bookkeepers for small businesses in Sydney with any enquiries you have about bookkeeping or your accounts.