1, direct write-off method:
That is, it is directly written off from accounts receivable in the current period when bad debts occur and recorded as bad debt expenses. This method is simple, but it doesn't reflect the matching relationship between accounts receivable and bad debt loss in terms of time and quantity, so it doesn't conform to the matching principle.
2. Allowance method:
That is, according to the amount of accounts receivable in each period and different default periods, the bad debt loss of each period is estimated on schedule and counted as the current expenses, and recorded in the allowance account.
First, the causes of bad debts
The occurrence of bad debts is generally due to the debtor's inability to repay the due debts, or the good faith is prepared to deny the payment, which makes the creditors have bad debts. This is from the debtor's perspective. However, from the creditor's point of view, there are mainly the following reasons for bad debts:
1, improper sales management
Many enterprises set the commission of business personnel based on the sales volume, causing business personnel to concentrate on sales volume. Did not investigate the other party's integrity, financial status, solvency, etc. At the same time, in order to obtain high price difference, some enterprises set too high a price, resulting in a backlog. In this case, the enterprise regards the payment problem as a relatively minor problem, which accumulates over time, thus forming a backlog of bad debts of the enterprise.
2. The investigation process is too hasty.
Some salespeople just heard others say how good the other party's funds and integrity are, and did not adopt further investigation measures, such as personal observation and communication with as many relevant customers as possible, and began to sell their products.
3. The content of the contract is not rigorous
Due to the lack of contract knowledge, the content of the contract is too hasty and negligent, which leads to loopholes in the contract and grasps the handle for the other party. At the same time, there is no necessary knowledge about financial bills, especially the knowledge or experience in the handling of checks, and the knowledge of preventing bad checks and false account tickets, so the relevant acceptance receipts are issued without room, which leads to the failure of recourse and bad debts.
4. Disputes caused by quality problems
After receiving the goods, the other party may put forward the quality excuse, which leads to the stalemate between the buyer and the seller because of the quality problem, resulting in bad debts for a long time.
Secondly, look at the causes of bad debts from the debtor's point of view.
(1) Deliberate blackmail
This is the quality of the debtor.
(2) There are too many bad debts
Because the other party does not pay attention to the management of bad debts, it causes too many bad debts, and finally it is unable to repay them. Due to the excessive bad debts of debtor enterprises, or the tightening of financial policies, it is difficult for enterprises to borrow money, resulting in poor capital operation, insufficient production capacity and increased expenses, which leads to low profitability and a vicious circle caused by market shrinkage.
(3) Industry shrinkage and business policy mistakes
Due to fierce competition in the industry, the profit rate of market sales has decreased. At the same time, there are deviations or mistakes in the company's business policy, such as too much money invested in infrastructure, resulting in poor capital turnover.
Second, write-off conditions
Commercial banks must draw bad debt reserves and write off bad debts in accordance with the law. Only under the legal procedures and scope can commercial banks write off their bad debt reserves. The bad debt reserve drawn by commercial banks is used to make up for the following losses of commercial banks:
1, the borrower and the guarantor are declared bankrupt according to law, and they can't pay off the loan after settlement.
2, the borrower died, or in accordance with the provisions of the "General Principles of the Civil Law", declared missing or dead, with its property or heritage to pay off, failed to pay off the loan.
3. Part or all of the loans that the borrower has suffered from major natural disasters or accidents, suffered huge losses and could not get insurance compensation, or failed to pay off after paying off with insurance compensation.
4. Overdue loans approved by the State Council Project.
Write-off of bad debts shall be subject to a graded examination and approval system, and the examination and approval procedures shall be strictly performed, and bad debts shall be written off in time. Foreign exchange loans should draw the corresponding RMB bad debt reserve, and cash should not be drawn. In case of bad debt loss of foreign exchange loans, after examination and approval, you can apply for buying foreign exchange to offset the loss of foreign exchange loans.
Iii. Withdrawal of bad debt reserve
Accumulated withdrawal amount of bad debt reserve in the current year = loan balance at the end of the year × 1%- bad debt reserve
The write-off of bad loans should retain the right of recourse. Recover the write-off loan bad debts and increase the bad debt reserve, so that the balance of the bad debt reserve at the end of the year exceeds the loan balance at the beginning of the year 1%, and it is not necessary to rush back the excess in that year.
Banks should follow two principles when withdrawing bad debt reserves:
First, the principle of timeliness;
The second is the principle of sufficiency.
The former means that the bank's bad debt reserve should be withdrawn when it is estimated that there may be inherent losses in the loan and the actual value of the loan may decrease, rather than when the losses are actually realized or the loan needs to be written off; The latter means that banks should keep enough reserves to make up for the inherent losses of loans at any time.
Due to the inevitability of losses, it has become an effective tool for banks to withdraw bad debt reserves in time and in full.
Extended data:
Prevention of bad debts
According to the various signs of relevant customers in the process of business contact, we can make judgments to prevent possible bad debts:
1, operator status:
What is the ability, mental state, whether the company is clear about the disposal of public funds, and whether the rights of the board of directors are too concentrated;
2. Organizational status:
Whether the organization is overstaffed, whether the work mood is low, and whether the responsibilities are clear;
3. Sales management:
Whether the management is strict, how the payment is returned, and how the market competitiveness is;
4. Inventory status:
Whether the purchase is irregular, whether the inventory is excessive, whether the purchase price is too high, and how to deal with the leftovers;
5. Financial status:
What is the capital situation, cash flow, debt ratio, excessive investment, improper use of funds, and frequent demand for funds?
According to the investigation of the above contents, and then comprehensively analyze its current customer credit status. Grasp the omen of bad debts.
Unless the intention of malicious bankruptcy and roll away, for the general business may go from bad to worse, the signs of bad debts are as follows:
1, whether the operator is in a trance;
2, whether the financial personnel in a hurry to deal with the relevant bank accounts;
3. Whether the upper-level personnel suddenly resigned;
4. Whether the salary is in arrears for too long;
5, whether the relevant personnel have great opinions;
6, whether a large number of goods without justifiable reasons.
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