Write-Off
A write-off removes an uncollectible invoice from accounts receivable.
When an invoice is deemed uncollectible — the customer is insolvent, has vanished, or collection has failed — the business writes it off: removing it from accounts receivable and recording it as an expense. A write-off is an accounting recognition that the money will not come, and it may be tax-deductible depending on local rules.
Example
After a customer declared bankruptcy, the $3,200 invoice was written off as bad debt expense.
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Frequently asked questions
Does a write-off mean I stop trying to collect?
Not necessarily. Businesses sometimes continue collection efforts (or sell the debt) after writing it off. The write-off is an accounting step; any later recovery is recorded as income.
Is a write-off tax-deductible?
In many jurisdictions, genuine bad debts are deductible, but conditions apply — for example, the debt must have been included in income and proven unrecoverable. Confirm with your accountant.
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