Bad Debt

Bad debt is a term that describes loans and outstanding balances that are deemed uncollectible. They arise when a company is incapable of paying back debt, resulting in either delayed, reduced, or missing payments. These loans typically come with a high or variable interest rate and unfavorable terms.

Balloon Payment

As opposed to installment loans (or fully amortized loans) where all of the payment amounts are fixed, in a balloon payment, a lump sum is paid at the end of a loan's term. The final payment is significantly larger than all of the payments made before it, and as a result it is more risky so it often comes with a higher interest rate. The benefit is that the debtor has a lower initial payment, and typically lower ongoing monthly payments.

Bank Reconciliation

Bank reconciliation is the process of comparing a business’s bank balance to their books (e.g. their financial records). Differences between the records are reconciled, or adjusted/corrected, to make them align. This internal control is often used to prevent fraud.

Bargaining Power

Bargaining power refers to the relative ability of both parties in a negotiation to influence one another. In most negotiations, there is an inequality between the level of influence that both parties can exert, resulting in a one-sided compromise. However, in some cases, both parties have the same level of influence and thus they have equal bargaining power, resulting in a true compromise.