What Is the Difference Between “Settled” and “Bad Debt” Status in an Employee Custody?

Both statuses mean that the custody has been closed, but the reason and financial impact differ:

• Settled: Means the employee has paid off the full custody amount through recorded settlements and the remaining balance has reached zero. No amount has been lost or written off.
• Bad Debt: Means the employee has not paid the remaining balance and the organization has decided to write it off and transfer it to the bad debt account under other expenses. The system automatically creates journal entries reflecting this transfer.