---
title: "What is write-off?"
description: "Write-off explained in plain English: definition, how it works, an example, and how it appears in QuickBooks and Xero."
url: https://ledgerbpo.com/glossary/write-off/
updated: 2026-09-11
publisher: LedgerBPO (SS Support Network LLC)
language: en-US
---

# What is write-off?

Glossary

A write-off is the removal of an uncollectible amount, such as an unpaid invoice or damaged inventory, from a business's books because it is no longer expected to be recovered. It reduces the related asset and records a matching expense or loss.

Updated September 2026

## How write-off works

Before writing off a balance, a business usually exhausts reasonable collection efforts: reminder statements, calls and sometimes a formal demand letter. Once an amount is judged genuinely uncollectible, such as a customer that has gone out of business, the invoice balance is removed from accounts receivable and charged to a bad debt expense account.

Write-offs also apply outside accounts receivable, including obsolete or damaged inventory that can no longer be sold and small cash discrepancies. A write-off does not mean a business stops trying to collect entirely; some businesses keep a separate memo record and reverse the entry if payment arrives later, recording it as a bad debt recovery.

## Example

A landscaping company has a $1,800 invoice outstanding from a customer for eight months, and repeated calls and a final notice go unanswered. The bookkeeper writes off the balance, debiting bad debt expense $1,800 and crediting accounts receivable $1,800. If the customer later sends a $1,800 check, the company records it as a recovery rather than reopening the original invoice.

## Write-off in QuickBooks Online vs Xero

In QuickBooks Online, a write-off is usually recorded using a credit memo or a discount line item applied against the open invoice, tagged to a bad debt expense account. In Xero, the same result comes from applying a credit note or using the write-off option in the invoice's Receive Payment screen against a bad debt account.

## Common mistakes

- Writing off a balance too quickly without exhausting reasonable collection efforts first, which gives up on cash that a reminder call or payment plan might have actually recovered.
- Simply deleting an uncollectible invoice instead of recording a proper write-off against bad debt expense, which understates expenses and leaves no record of what was actually lost.
- Letting old, uncollectible balances sit open on the aging report indefinitely instead of writing them off, which makes accounts receivable look larger and healthier than it really is.

## Why it matters

An accounts receivable balance cluttered with uncollectible invoices overstates what a business or provider actually expects to collect, which can mislead an owner planning cash flow or a lender evaluating creditworthiness. Recording write-offs properly against bad debt expense keeps the aging report focused on receivables genuinely worth pursuing, and gives a tax preparer an accurate figure for deductible bad debt at year end.

## Related terms

- [Bad debt expense](https://ledgerbpo.com/glossary/bad-debt-expense/)
- [Allowance for doubtful accounts](https://ledgerbpo.com/glossary/allowance-for-doubtful-accounts/)
- [Contractual adjustment](https://ledgerbpo.com/glossary/contractual-adjustment/)
- [All terms](https://ledgerbpo.com/glossary/)

## How LedgerBPO handles write-off

During a bookkeeping cleanup, we review aged receivables with you, flag balances that are genuinely uncollectible and record write-offs correctly against a bad debt expense account rather than leaving them sitting open on the aging report. This keeps your accounts receivable balance accurate and your financial statements a true picture of what is actually collectible.

[Messy books, rebuilt and reconciled](https://ledgerbpo.com/services/bookkeeping-cleanup/)

Next step

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Source: https://ledgerbpo.com/glossary/write-off/ · Contact: https://ledgerbpo.com/contact/ · Full site map for agents: https://ledgerbpo.com/llms.txt