06 - Oct - 2024

Loans Can Be Good Loans Can Be Bad

October 12, 2021 0

Revenues and profits are the lifelines of any business enterprise. Completing the business cycle to the stage of actually receiving the money is necessary.

This is bound to lead to problems for the business. In fact, the inability to receive payments may cause the business organization itself to have trouble meeting its own expenses. This may lead to bad debt which can snowball into a major liability for the company. The risk of bad credit or pad payments is ubiquitous. In fact, when the situation gets really aggravated, some people even say that the system of credit is responsible for plunging our society into deeper debts. But that is probably going too far.

The credit payment system came into existence because at times it would be difficult to make large payments. The system of paying by credit allowed the dealer to continue doing business with customers with who he had a long-standing relationship and who were finding it difficult to make payments.

Many businesses would lend a loan on a good faith basis. However, as we all know, this does not always happen. People do suffer from financial crises at times. This makes it difficult for them to pay their bills and debts. Sometimes the payment may never materialize, and the person who is to receive the payment finds himself stuck with bad debt. Yet, even though the payment will never appear, the customer will have received the benefits of the purchase he had made.

Companies do plan ahead of time and make provisions for any such bad debts but these do bring down their net profit. Moreover, it does not reflect well in their accounts. Many individuals also are generous enough to loan money to their friends or others. Despite waiting and despite reminders and despite best effort if this money is still not recoverable, it is called bad debt. This must be written off from your book of accounts.

Bad debt is a loss and an embarrassment. It sometimes leads to all their hard work going unnoticed. It is sad but true that sometimes only these lost payments manage to catch everyone's attention. Only some types of bad debts can be deducted from tax whereas others are not exempted from it.

The only way in which a company can cut down on such expenses is by employing the services of a collection agent who can go from debtor to debtor to collect the pending payments. You might try it but do not be too hopeful of success. The person could skip tracing.

In order to protect one from heavy losses, the seller or dealer should always get an undersigning from the customer stating that he will make the payment within a stipulated period of time. Alternatively, the dealer could collect a retainer fee for the services are being offered to the purchaser. Even if the due date is already in the past, there might be a way out. Probably paying according to a payment plan could avoid the loan going bad. According to the plan give the borrower the opportunity to make small though fixed payments.

advertisment

you might also like

payday_loa

Why you should avoid Payday Loans

October 12, 2021

Why you should avoid Payday Loans

personal_loans

Online Personal Loans

October 12, 2021

Online Personal Loans

payday_loans

Faxless Payday Loans

October 12, 2021

Faxless Payday Loans

mortgage_loans

Types of Mortgage Loans

October 12, 2021

Types of Mortgage Loans

purchase_loans

Purchase Loans Explained

October 12, 2021

Purchase Loans Explained

commercial_loans

What Are FHA Commercial Loans?

October 12, 2021

What Are FHA Commercial Loans?

Contact Us Through The Mail

Email: weblinks2seo@gmail.com

recent post

What Is Dental Emergency And What To Do In Tough Situations?

June 8, 2023

Introduction In our daily lives, unexpected situations can arise, including dental [...]

Overbite: A Peek Into It

June 6, 2023

Some things like eating, speaking, or brushing are common to all [...]

What Are The Types Of Office Chairs?

May 25, 2023

In this article, you will understand the various office chairs used [...]

Why do Patients Mainly Prefer Colorful Braces?

May 25, 2023

In this article, you will learn about color braces, a topic [...]

What is the guideline for choosing the braces color perfectly?

May 10, 2023

You should choose a color you'll be happy with because some [...]

popular post

blog

tag