1. Overdue debts must be identified and provided for as the risk of non payment increases. A sufficient provision should be provided to cover all anticipated uncollectible accounts and should not be calculated simply as a percentage of sales.
2. Bad debts should be written off to the profit and loss (Bad Debt expenses) when all possible recovery actions have been exhausted and after formal approval is received from the Owner’s Representative and/ or Corporate Office. The provision account should then be recalculated.