The provision for doubtful debts is identical to the allowance for doubtful debts.The provision is the estimated amount of bed debt that will arise from accounts receivable that have been issued but not yet collected.  A business typically estimates the amount of bad debt based on historical experience, and charges this amount to expense with a debit to the bad debt expense account (which appears in the income statement) and a credit to the provision for doubtful debts account (which appears in the (balance sheet.)

The provision is used under accrual basis accounting, so that an expense is recognized for probable bad debts as soon as invoices are issued to customers, rather than waiting several months to find out exactly which invoices turned out to be uncollectible.