Glossary
Bad Debt
Premium or fees an agency has billed but does not expect to collect.
Bad debt is the realised cost of extending credit. Agencies incur it whenever they bill a client who does not pay, and under agency bill it is compounded — the carrier still gets its remittance whether or not the client paid.
Tracking bad debt as its own figure rather than burying it in write-offs makes credit policy visible. An agency that knows what non-payment costs it annually can decide deliberately whether to keep offering agency bill to a given segment.
See also
- Write-Off — The accounting removal of a receivable judged uncollectible, recognising the loss and clearing the balance from the ledg…
- Accounts Receivable Aging — A report grouping outstanding client balances by how long they have been unpaid, typically in 30, 60, 90 and 120-day buc…
- Agency Bill — A billing arrangement in which the agency invoices the insured, collects the premium, and remits it to the carrier net o…