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Bad Debt Write-Off is a critical accounting and revenue cycle management action where healthcare practices formally recognize patient balances that are deemed uncollectible and remove them from their accounts receivable (AR) ledger. In the realm of medical billing, not all patient-responsibility amounts can be recovered—despite diligent collection efforts—due to factors such as patient bankruptcy, prolonged non-payment, untraceable contact information, or successfully negotiated settlements. Writing off bad debt is not an admission of failure but a necessary step in maintaining accurate financial records, ensuring GAAP (Generally Accepted Accounting Principles) compliance, and providing a clear, realistic picture of a practice’s financial health. Properly managing bad debt write-offs involves establishing and following a formal policy that defines the timeline and criteria for moving an account from “collections” to “written off,” ensuring consistency and audit readiness.

Understanding Bad Debt Write-Off in Business Finance

by AdminRevenue Cycle Management (RCM) January 10, 2026January 11, 2026No Comments

Businesses face unpaid debts often. They manage these through specific processes. Bad debt write-off helps clean financial statements. Companies assess receivables regularly. This practice maintains accurate books. Lenders and investors value transparency. Proper handling boosts creditworthiness. Regulations guide these actions strictly. What Causes Bad Debts in Operations Customers default on payments frequently. Economic downturns trigger …