How can bad debt expense be managed appropriately?

• A. Only taking cash payments
• B. Conducting timely callbacks and proper deposits
• C. Ignoring past-due accounts
• D. Cutting staff hours

Answer: (B)

Managing bad debt expense effectively is crucial for maintaining the financial health of an organization. Conducting timely callbacks and proper deposits plays a significant role in this process. This strategy involves reaching out to customers who have not made their payments on time, providing an opportunity to remind them of their obligations and potentially recover amounts owed.

Timely callbacks serve as a proactive measure to engage with customers, often leading to solutions that can prevent accounts from becoming hopelessly overdue. By discussing payment options or creating manageable payment plans, businesses can find ways to collect on debts while nurturing relationships with their clients.

Proper deposits refer to vigilant monitoring of cash flows and ensuring that payments are recorded promptly. This meticulous tracking can help identify any anomalies or concerns early in the process, allowing the business to address potential issues before they escalate into bad debts.

Other options lack the comprehensiveness needed to manage bad debt effectively. While only accepting cash payments might reduce the risk of bad debts, it limits customer flexibility and could hinder sales opportunities. Ignoring past-due accounts entirely does not address the issue and would likely exacerbate financial problems. Cutting staff hours is not a direct method of managing debt; it may even lead to decreased productivity and hinder the collection process. Therefore, conducting timely callbacks and