Common use of Bad Debt Clause in Contracts

Bad Debt. If, after exercising good faith, commercially reasonable collection efforts, LICENSEE or a Sublicensee is unable to collect any amount that it has billed or invoiced for the sale, lease or other transfer of Licensed Products for which Licensee has already paid royalties under Section 4.3, LICENSEE shall be entitled to deduct the amount of such royalties with respect to such uncollected amount from the royalty payments due under Section 4.3.1 in the next calendar quarter, which deduction shall be set forth in detail as it would be recorded in LICENSEE accounting records in the corresponding report under Section 5.3 below. If, at any time after such deduction LICENSEE does collect any of such amount, such collected amount shall be included as Net Sales in the calendar quarter in which they are collected and LICENSEE shall pay BCM royalties thereon accordingly.