Bad-Debt Reserve

Allowance for Bad Debts
The allowance for bad debts is an estimate of the accounts receivable that a company does not expect to collect. This estimation is used to anticipate potential losses and adhere to the accounting principle of conservatism.
Bad-Debt Reserve
A Bad-Debt Reserve is an offset to Accounts Receivable, with amounts that can be expected to be uncollectible. Businesses use this reserve to account for receivables that are not likely to be collected.

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