# Allowance for Doubtful Accounts

*Accounting & Reporting — Finicade finance glossary*

The allowance for doubtful accounts is an estimate of receivables that will never be collected, deducted from the asset and charged to expense in advance. Because it's an estimate, it's a well-worn earnings lever: under-providing lifts profit today and forces a larger writedown later. Comparing the allowance to receivables over several years shows whether management's assumptions are drifting.

**Also known as:** bad debt provision, expected credit loss, allowance for bad debts

**Related terms:** [Accounts Receivable](https://finicade.com/glossary/accounts-receivable), [Write-Off](https://finicade.com/glossary/write-off), [Days Sales Outstanding](https://finicade.com/glossary/days-sales-outstanding), [Non-GAAP Earnings](https://finicade.com/glossary/non-gaap-earnings), [Credit Risk](https://finicade.com/glossary/credit-risk)

Source: https://finicade.com/glossary/allowance-for-doubtful-accounts