Bad debts ratio calculation
|Credit Management has two main objectives that complement each other:
|To assess your performance on this crucial point, we propose to measure the bad debts ratio.
Bad debts ratio is calculated as follows
Bad debts for the period*
The bad debts rate must remain permanently below 1%. Otherwise, you must make significant progress in securing your business.
In order to have a fair indicator, it is necessary that the losses and provisions are taken in accordance with accounting rules and tax laws. Bad debts value must be the reflect of the real situation of your receivables.
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