Receivables are monetary claims. Arise from everyday sales and are the main thrust of operations. Terms are normally greater than 60 days. Occasionally requires security.
Bad Debts occur when a firm is unable to collect from some credit customers.
Bad Debts are an expense of doing business. Dr. Bad Debts Expense Cr. Accounts Receivable Easy to use. Does not match expenses against revenue. Incorrectly records the balance of Accounts Receivable on the Balance Sheet as some accounts will prove uncollectable.