Accounting

Bad debt

Money owed by current or former residents that the manager no longer expects to collect and writes off.

Bad debt usually comes from residents who moved out owing rent, fees or damages beyond their deposit. After collection attempts, the balance is written off: it leaves receivables and is recorded as a loss, though it may still be sent to a collection agency.

Bad debt as a percentage of gross potential rent is a key indicator of screening and collections quality. Recoveries on previously written-off balances are usually recorded separately.

See it on a sample company