AR Write-Off Checklist
Writing off a receivable removes a debt you have decided is uncollectable from your ledger. Done with discipline, it keeps AR honest; done carelessly, it loses money you could have recovered. This checklist keeps it controlled.
What this checklist covers
- Confirm a debt is genuinely uncollectable before writing it off
- Gather the evidence that supports the decision
- Apply the correct accounting and GST treatment
- Get the write-off approved at the right authority level
- Keep the trail for audit and possible later recovery
7 min
Before you start
A write-off is a deliberate decision, not a tidy-up, so make the case before you post it. Confirm recovery has genuinely been exhausted and your approvals are clear.
- Confirm the debt is undisputed and that reasonable recovery steps have been taken.
- Check the approval authority required for the amount.
- Gather the chasing history, statements and any recovery or insolvency evidence.
- Note that write-off accounting and any GST adjustment differ — this is general information, so confirm both with your accountant.
Step 1 — Confirm it is genuinely uncollectable
- Check there is no live dispute that should be resolved instead of written off.
- Confirm reminders, statements and escalation have been exhausted.
- Look for insolvency, deregistration, or a debtor who cannot be located.
- Consider whether a recovery option remains before giving up the debt.
Step 2 — Apply the accounting correctly
- Distinguish a write-off (removing the debt) from a credit note (the debt was not owed).
- Post the write-off to a bad-debt expense, or against the provision if one was raised.
- Consider whether a GST adjustment applies to the written-off amount, and confirm it.
- Remove the invoice from open AR so the aged report reflects reality.
Step 3 — Approve, record and keep the door open
- Obtain documented approval at the correct authority level before posting.
- Record the reason, the evidence and the approver against the account.
- Note that a write-off is an accounting step, not legal forgiveness — recovery can still be pursued.
- Flag the account so any later recovery is credited back to income.
Before you write a debt off for good, a free debt appraisal can tell you whether it is genuinely a lost cause or still recoverable. If the amount simply was not owed, use a credit note instead.
Common mistakes
- Writing off a dispute. A disputed amount should be resolved or credited, not quietly written off.
- Confusing write-off with credit note. One says 'uncollectable', the other says 'not owed' — they are not interchangeable.
- Skipping approval. Unapproved write-offs are a fraud and control risk.
- Assuming the debt is gone. A write-off is accounting only; the customer may still legally owe you.
Key takeaways
- Exhaust reasonable recovery before writing a debt off
- A write-off says uncollectable; a credit note says not owed
- Post to bad-debt expense or against the provision, and check GST
- Keep evidence and approval — a write-off does not extinguish the debt legally
Frequently asked questions
Does writing off a debt mean I can no longer chase it?
No. A write-off is an accounting decision that the debt is uncollectable for reporting purposes; it does not forgive the debt or stop you pursuing recovery. If the customer later pays, you reverse the write-off and recognise the recovery as income.
When should I use a credit note instead of a write-off?
Use a credit note when the amount was never genuinely owed — a pricing error, a return, an over-charge or an agreed reduction. Use a write-off when the amount is owed but cannot be collected. Mixing them up misstates both revenue and bad-debt expense.
Can I adjust GST when I write off a bad debt?
There are specific conditions and timing rules around adjusting GST on a written-off debt in Australia, and they do not apply in every case. This is general information only — confirm the treatment with your accountant or the ATO before making any adjustment.
Work the checklist, then get paid
Use the free Invoice Generator, then let Merion recover anything that goes unpaid — commission-only.