Loans Can Be Good Loans Can Be Bad

Loans Can Be Good Loans Can Be Bad
Revenues and profits are the​ lifeline 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 troubles 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 who he had a​ long standing relationship with 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.

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