# What is bad debt?

Source: https://launch-rec.com/glossary/bad-debt. Category: Funding. Market: US and UK.

## Definition

Invoiced revenue that will never be collected. In contract staffing it is doubly painful because the contractor has already been paid.

## In practice

A $50,000 unpaid invoice at 25% gross margin costs the agency $37,500 of real cash, not $12,500 of profit. That is why credit checking a new client matters more than the size of the first order.

Watch dilution too — credit notes and timesheet disputes reduce what a funder will advance even when the client eventually pays in full.

## Related terms

- https://launch-rec.com/glossary/recourse
- https://launch-rec.com/glossary/dso
- https://launch-rec.com/glossary/invoice-factoring