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Provision of doubtful debts can be based on the aging of the receivables.Important to note is the aging should be based on due date of the invoice and not from the date of invoice. In case for any customer , the invoice is long outstanding say more than180 days after it become due then management will decide whether provision for doubtful debts is required based on number of factors such as:
-prior payment history of the customer
- Any dispute on the invoice outstanding
- if the receivable is secured or not (example; if it is through LC then there is no recoeverability concern)
- financial condition of the customer
- willingness of customer to pay
