Example
A $1,400 invoice from a dissolved company written off at the end of the quarter.
Also called writing off a debt or booking a bad debt expense.
What it means in practice
A write-off is the accounting side of accepting a bad debt. The invoice stays in the history, the receivable comes off your books, and the loss is recorded where your accountant can see it.
Do it deliberately and at a set point, such as at 120 days or when a claim fails, rather than by letting the invoice drift down the aging report forever.
Covered in full in the guide to chasing an unpaid invoice.
Where it shows up on the paperwork
A write-off changes your records rather than any document the client holds. The invoice stays as issued; the receivable comes off your books.
What goes wrong
- Writing off quietly and then still chasing, which wastes the time the write-off was meant to save.
- Letting invoices drift down the aging report forever instead of setting a point at which they are written off.
- Writing off without telling your accountant, so the year-end numbers do not match the ledger.
Common questions
When should I write off an unpaid invoice?
At a point you set in advance, such as 120 days or after a failed claim. Making it a rule stops it becoming a mood.
Does writing off an invoice mean I cannot collect it later?
No. It is an accounting decision, not a legal one. If the money turns up afterwards it goes back into the books as a recovery.