From a lending perspective, I think it depends on when the bad debt was incurred. I am working on a deal now where there was a large bad debt item in 2020 but upon review that bad debt revolves the right off of some A/R dating back to 2014 that the company finally wrote off inredactedIn that case not only the client but also the lenders are comfortable because it was an adjustment for something that happened one-time in the past. So if it is truly one-time and can be explained, we can typically get lender's to add it back to cash flow. However, if the company consistently has bad debt year over year, then it cannot be added back. If you need advice on the specific situation you are looking at from a lending perspective, feel free to reach out at redacted Good luck.

In my opinion, if it is one bad debt in one year out of the last several years I would consider it a one time event. If there always seems to be a bad debt write-off on the P&L, build it in as a recurring expense.