Bad debt
A debt is a sum of money that is owed by or due from a debtor to a creditor. A bad debt is a debt which a creditor realises will never be repaid, and which the creditor is not willing to embark on legal processes to retrieve. The loan is typically ‘written off’ ie, it is assumed lost forever, never to be received.
Such a state of affairs may occur, for example, when the debtor is a company that has gone, or is about to go, into liquidation, or a heavily-indebted individual passes away. The term ‘insolvency' describes the inability of a debtor to pay its debts. In the United Kingdom, insolvent individuals are made 'bankrupt', while companies are put into 'liquidation' or 'administration'.
The precise definition of what constitutes a bad debt will depend on the country in which it exists.
NB Cash flow is an issue for the construction supply chain, and is a common reason for contractors and sub-contractors becoming insolvent. This can be catastrophic for a project in terms of time and money. For more information see: Cash flow.
[edit] Related articles on Designing Buildings
Featured articles and news
Shortage of high-quality data threatening the AI boom
And other fundamental issues highlighted by the Open Data Institute.
Data centres top the list of growth opportunities
In robust, yet heterogenous world BACS market.
Increased funding for BSR announced
Within plans for next generation of new towns.
New Towns Taskforce interim policy statement
With initial reactions to the 6 month policy update.
Heritage, industry and slavery
Interpretation must tell the story accurately.
PM announces Building safety and fire move to MHCLG
Following recommendations of the Grenfell Inquiry report.
Conserving the ruins of a great Elizabethan country house.
BSRIA European air conditioning market update 2024
Highs, lows and discrepancy rates in the annual demand.
50 years celebrating the ECA Apprenticeship Awards
As SMEs say the 10 years of the Apprenticeship Levy has failed them.
Nominations sought for CIOB awards
Celebrating construction excellence in Ireland and Northern Ireland.
EPC consultation in context: NCM, SAP, SBEM and HEM
One week to respond to the consultation on reforms to the Energy Performance of Buildings framework.
CIAT Celebrates 60 years of Architectural Technology
Find out more #CIAT60 social media takeover.
The BPF urges Chancellor for additional BSR resources
To remove barriers and bottlenecks which delay projects.
Flexibility over requirements to boost apprentice numbers
English, maths and minimumun duration requirements reduced for a 10,000 gain.
A long term view on European heating markets
BSRIA HVAC 2032 Study.
Humidity resilience strategies for home design
Frequency of extreme humidity events is increasing.
National Apprenticeship Week 2025
Skills for life : 10-16 February