**Bad-debts written off always affect the Debtors.**

Bad debts refer to the amounts that are deemed uncollectible by a business. When a business realizes that it will not be able to recover the outstanding amounts from its customers, it writes off those debts as bad debts. This process has several implications for the debtors. Let's discuss them in detail:

1. **Reduction in Accounts Receivable:** Writing off bad debts reduces the accounts receivable balance of the business. Accounts receivable represents the amounts owed to the business by its customers. By removing the uncollectible debts from the accounts receivable balance, the total amount owed by the debtors is reduced.

2. **Impact on Financial Statements:** Writing off bad debts affects the financial statements of the business. The balance sheet shows a decrease in accounts receivable, which in turn reduces the total assets of the business. The income statement reflects the bad debts as an expense, which reduces the net income of the business. Consequently, the retained earnings and owner's equity are also affected.

3. **Loss of Revenue:** When a business writes off bad debts, it acknowledges that it will not receive the outstanding amounts from its debtors. As a result, the business incurs a loss in revenue. This loss directly affects the profitability of the business.

4. **Affects Cash Flow:** Bad debts written off do not directly impact cash. The cash outflow from the business has already occurred when the goods or services were provided to the debtors. However, the write-off indirectly affects cash flow as the business is unable to collect the outstanding amounts, which could have been used for other purposes.

5. **Credit Policy Review:** Writing off bad debts prompts businesses to review their credit policies and procedures. It helps in identifying potential improvements to minimize the occurrence of bad debts in the future. This review enables businesses to assess the creditworthiness of their customers more effectively and implement necessary measures to protect themselves from future losses.

In conclusion, bad-debts written off affect the debtors as it reduces the accounts receivable, impacts financial statements, causes a loss of revenue, indirectly affects cash flow, and triggers a review of credit policies.