OK, this is not a phrase your publisher will use to you but one you may, sooner or later, use to your publisher. As in - 'I am going to take you to the small claims court before writing this off as a bad debt.' I hope not, but it gets increasingly likely as the financial situation worsens or stays the same, especially if you work with small publishers.
A bad debt is a debt you have decided is never going to be paid. You have tried all the means you can think of to reclaim the money your publisher owes you and nothing has worked. You have sent an invoice, you have sent a statement, and another statement [tick]. You have emailed them politely, you have emailed them less politely [tick]. You may have phoned them [no tick: I don't phone - there's no record you ever spoke to anyone so they can deny anything they agreed]. You may have cursed them with plagues of boils and cockroaches [tick]. You may have threatened them with court action [tick]. You may have actually taken them to court [tick - though not in current case, yet]. And you may have given up.
At the point where you give up, they become a bad debt. You don't tell them that - then there would be no chance of getting the money. And who knows, if things improve for them they may eventually pay you as most publishers are honest and decent but some are unlucky or inefficient.
Once you have decided it's a bad debt, you can put it in your accounts as such. If you don't, you will have to pay income tax on the money even though you aren't going to get it. This applies to the UK: when you submit your tax return, the income you declare for your freelance earnings from writing (and anything else you do) is calculated by adding up the value of the invoices you've sent out, minus the expenses you're claiming. It's not calculated on the money that's actually come in. You need to enter the bad debt under 'bad debt provision' and exclude it from your figure for the year. If you sent out the invoice in the previous tax year, you may have already paid tax on it - but you can still reclaim it in the next tax year. If you're not sure what to do, phone the tax office. If you ever do get the money, you'll have to pay the tax, of course.
*If you're a member of the Society of Authors, which you should be, they will help you to chase late payments.