This can occur on account of two reasons:
-
poor quality delivery due to which the customer is holding back the payment.
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company has not done a proper due diligence on the credit worthiness of its customers and the customer eventually not paying for the services it has received.
Not sure if this is an industry wide issue. It is a good sign that management has acknowledged these as credit impaired and already fully provisioned for the balances.
AJ
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