Bad Debt

Hi everyone. Tell me what does your company consider to be "bad debt"? When a person moves out how long until the balance is written off? Do you collect on that in-house? Are you booking all of those charges as bad debt? Tell me how your process works. Are all of the charges considered as your bad debt % or are you just considering non lease termination charges as bad debt?

Excellent question and one that dogs every manager. Your CPA should be able to advise on how to best handle this persistent issue. With enough of this debt, the manager's performance looks to be less than it should be and the investors get the wrong idea about the building. It can also prevent repairs and necessary maintenance from being done.
I am glad to see this topic raised.This debt has to be written off quickly

I work with several CPA's that service apartment complexes, property managers and landlords alike. When reviewing Bad Debt, the question my CPA's and I ask of our clients is,"what are you doing to try to recover that loss?" Some businesses have the ability to work it in-house, some don't. Those that do not have the time or resources to try to recover the Bad Debt are referred to Innovative Principal Strategies. Innovative Principal Strategies has many functions and one of them is collections, another is tenant prescreening. These functions help property managers minimize their losses and also recover a percentage of the Bad Debt,enhancing the statistics of the manager's performance. With that said, I recommend that you contact myself or a local collection agency and see if that is a viable resource for assisting in your Bad Debt recovery.

In our company we do use a collection agency as well as collect in-house. I'am interested to know what others are considering their bad debt % to actually be? Anyone willing to answer that? :cheer: Bad debt technically should be anything that is owed prior to the move-out. Lease termination charges are added in after the fact, do they get counted? When you as a company state your collection % on your bad debt to be great just how great is it? Im curious to know. I myself think our company is one that is fairly great but what is the norm out there?