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Bad Debts Provision?*
Could anyone kindly help:-
A sum of £1000 returns 2% interest. An appropriate Bad Debts for the business is 5.6%. 2% of £1000 is £20, 5.6% of a £1000 is £56. The £1000 is loaned over 36 months. Is there any way that the provision can be costed in such a way as to leave a proft margin? I ask because I'm costing a small money-lending business as a second income. Thank you.
Answers:
1) Why are you lending at 2% and why have you decided 1 in 20 of yur debts will propbably go bad? Your business is not profitable on these terms.
2) sorry you lost me at could anyone kindly help lol. But 2 % does seem a low interest rate are you sure that is right
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