Write-Offs

Write off bill amounts that will never be recovered while maintaining accurate financial records.

🎥 Video Tutorial

This video shows how to write off uncollectible bill amounts.

What are Write-Offs?

A write-off allows you to permanently mark all or part of a bill as unrecoverable without deleting the bill itself. The use cases are varied and reflect the realities of running a professional services business. Sometimes a client genuinely can't pay - their business failed or they're facing financial difficulties that make full payment impossible. Other times, you reach a settlement where the client agrees to pay a portion and you write off the rest to close the matter. You might write off amounts as goodwill gestures to preserve valuable long-term relationships, or absorb currency exchange fees and bank charges on the client's behalf. Disputed amounts often get resolved through write-offs when the cost of pursuing payment exceeds the benefit. And sometimes it's simply a strategic business decision - the amount is small enough that writing it off is more economical than the time and stress of collection efforts.

The critical distinction is between writing off and deleting. When you delete a bill, it vanishes completely from your system as if it never existed. You can't view the PDF, can't reference it in reports, and lose all record of the transaction. Writing off a bill is fundamentally different - the bill remains in your system with full documentation showing what was billed, what was paid, and what was written off. This preservation of records matters enormously for accounting accuracy, audit trails, and client relationship management.

Why Use Write-Offs?

From a financial accuracy standpoint, write-offs let you properly reflect reality in your books. Your revenue reports become more honest because they distinguish between "we haven't been paid yet" and "we're never getting paid." You can calculate your true recovery rate - the percentage of billed amounts that you actually collect - which is a more valuable metric than simply tracking outstanding balances. Every write-off creates an audit trail documenting why you made that business decision, which becomes important if your accounts are ever reviewed or if you need to justify financial performance to partners or stakeholders.

Client relationships benefit from proper write-off handling too. When you reach a settlement agreement with a client, having a formal write-off document provides clear evidence of the terms. If you forgive part of a bill as a goodwill gesture, the write-off record shows what you did for them - valuable information that your account managers can reference in future dealings with that client. It's transparent documentation that strengthens trust rather than creating ambiguity about what happened.

The reporting and business intelligence aspects shouldn't be underestimated. Write-off data, when analyzed over time, reveals patterns. Perhaps you're writing off too much work for a particular client type, suggesting your standard pricing doesn't fit that market segment. Maybe one industry consistently disputes certain types of charges, indicating you need clearer scope agreements upfront. Or you might discover that small invoices under a certain threshold are disproportionately written off, suggesting you should adjust your minimum engagement fees. These insights come from having write-off data captured systematically rather than buried in sporadic email exchanges about "forgiven amounts."

Types of Write-Offs

1. Full Write-Off

A full write-off marks the entire bill amount as unrecoverable. Use this when a client is completely unable to pay - perhaps their business went bankrupt or they've disappeared entirely. It's also appropriate when you've made a decision to forgive the bill entirely, whether as a goodwill gesture for a valued client going through temporary hardship, or because you've determined that pursuing the debt would cost more than the amount owed. This represents a total bad debt situation where you're acknowledging that zero payment will be received.

2. Partial Write-Off (Non-Specific)

A partial write-off reduces the bill by a specific amount without assigning that reduction to particular line items. This works well for general settlements where you and the client agree on a percentage split - perhaps the client pays 70% and you write off 30% to close the matter. It's ideal when you don't need granular tracking of which specific items were forgiven, or when you're absorbing currency exchange fees and bank charges across the whole bill rather than attributing them to specific line items. The write-off amount simply reduces the total owed without getting into the details of which work items it applies to.

3. Item-Specific Write-Off

An item-specific write-off lets you select exactly which bill items (rows) to write off while leaving others fully billable. This becomes necessary when a client disputes specific charges - maybe they're happy to pay for the core project work but contest the consulting fees. You select just the disputed items to write off. It's also useful when some work is accepted and some is rejected, perhaps due to quality issues with certain deliverables. This approach gives you detailed tracking showing precisely what was written off versus what was paid, which matters for understanding which types of work generate disputes.

How Write-Offs Are Calculated

When writing off specific items, the write-off amount is distributed proportionally based on each item's value.

Formula:

Write-off per item = (Write-off amount / Total of selected items) × Item value

Example:

• Total write-off: €100
• Selected items totaling: €600
  • Item A: €200
  • Item B: €300
  • Item C: €100

Calculation:

1. Ratio: €100 / €600 = 16.67%
2. Item A write-off: 16.67% × €200 = €33.34
3. Item B write-off: 16.67% × €300 = €50.01
4. Item C write-off: 16.67% × €100 = €16.67
5. Total: €100.02 ≈ €100

Why Proportional? This ensures fairness and maintains the relative importance of each item while applying the write-off.

Creating a Write-Off

Method 1: Write-Off Only (No Payment)

When you're writing off a bill without receiving any payment:

1. Go to Bills page
2. Find the bill you want to write off
3. Click on the bill to open it
4. Click "Write-Off" button
5. Choose the write-off type:

Option A: Full Write-Off

• Select "Full write-off"
• Entire bill amount is written off
• Click Save

Option B: Partial Write-Off (Non-Specific)

• Select "Partial write-off"
• Enter the amount to write off
• Don't select specific items
• Click Save

Option C: Item-Specific Write-Off

• Select "Partial write-off"
• Enter the amount to write off
• Select which bill rows to apply the write-off to
• The amount will be distributed proportionally across selected items
• Click Save

6. The bill status updates to show it's been written off

Method 2: Write-Off Combined with Payment

When a client pays part of a bill and you're writing off the remainder:

1. Go to Payments > Allocate Payments
2. Select the Client
3. Choose to add funds or use existing balance
4. Enter the payment amount (what client actually paid)
5. Select the bill to allocate against
6. You'll see the bill total is higher than the payment
7. Check "Include write-off for remaining amount"
8. The system automatically calculates: Write-off = Bill Total - Payment Amount
9. Click Next
10. Choose whether to include write-off amount in receipt (see below)
11. Click Save

Example:

• Bill total: €3,540
• Client pays: €1,000
• Automatic write-off: €2,540
• Result: Bill fully settled (€1,000 paid + €2,540 written off)

Best Practice

Always use this method when receiving partial payment with agreement that remainder is forgiven. It keeps everything in one transaction.

Write-Offs on Receipts

When you combine a payment with a write-off, you can choose to show the write-off amounts on the receipt.

Including Write-Off on Receipt

1. When creating the allocation with write-off
2. After clicking "Next", you'll see: "Include write-off amount in receipt"
3. Check this option
4. Complete the allocation

What Appears on Receipt:

• Payment amount (e.g., €1,000) - shown as the total
• Write-off amounts - shown under each bill row, indicating what was forgiven

Example Receipt:

Receipt for Payment: €1,000

Bill #12345 - Project Work
  Consulting Services: €2,000
    (Write-off: €1,270)
  Design Work: €1,540
    (Write-off: €1,270)

Total Paid: €1,000
Total Written Off: €2,540

Why Include Write-Off on Receipt?

Advantages:

• ✅ Transparency with client about what was forgiven
• ✅ Clear documentation of settlement agreement
• ✅ Client sees full picture of transaction
• ✅ Better record-keeping

When to Use:

• Settlement agreements where client needs to see what was forgiven
• Goodwill gestures you want to highlight
• Formal documentation requirements

When NOT to Use:

• Client doesn't need to know internal write-off decision
• Simpler receipt preferred
• Only recording payment, not the forgiveness

Common Workflows

Workflow 1: Client Can't Pay - Full Write-Off

Scenario: Client business failed, bill of €5,000 will never be recovered

1. Go to Bills
2. Open the €5,000 bill
3. Click "Write-Off"
4. Select "Full write-off"
5. Add note: "Client business closed - uncollectible"
6. Save

Result: Bill marked as written off, shows €0 paid, €5,000 written off

Workflow 2: Settlement - Partial Payment + Write-Off

Scenario: Client disputes bill, agrees to pay €1,000 of €3,540 bill

1. Go to Payments > Allocate Payments
2. Select client
3. Enter payment: €1,000
4. Select the bill
5. Check "Include write-off for remaining amount" (€2,540)
6. Check "Include write-off amount in receipt"
7. Save

Result:

• Client pays €1,000
• €2,540 written off
• Receipt shows both amounts
• Bill fully settled

Workflow 3: Write-Off Specific Line Items

Scenario: Client accepts most charges but disputes €500 of consulting on a €4,000 bill

1. Client pays €3,500
2. Go to Payments > Allocate Payments
3. Select client, enter €3,500
4. Select the bill
5. Check "Include write-off" (€500)
6. Select only the "Consulting" line item for write-off
7. Save

Result: €500 write-off applied only to disputed consulting item

Workflow 4: Absorb Bank Charges

Scenario: Client pays €2,000 but bank charges €50, you absorb the fee

1. Go to Payments > Allocate Payments
2. Select client
3. Enter payment: €2,000 (what you actually received)
4. Select bill worth €2,050
5. Check "Include write-off" (€50)
6. Note: "Bank transfer fee absorbed"
7. Don't include in receipt (internal decision)
8. Save

Result: Bill settled, €50 write-off for bank fee not visible to client

Viewing Write-Offs

On Bill Details Page

Open any bill that has been written off:

• Status shows "Written Off" or "Partially Paid + Written Off"
• Amount Paid shows what was actually received
• Amount Written Off shows what was forgiven
• Total shows original bill amount

In Bills List

Bills with write-offs may show:

• Different status indicator
• Write-off amount in a column
• Filter option to show only bills with write-offs

In Reports

Financial reports can include:

• Total write-offs for period
• Write-off percentage vs. revenue
• Client-specific write-off history
• Trend analysis

Best Practices

Recommendations

✅ Document reasons - Always add notes explaining why amount was written off ✅ Get approval - Have manager/owner approve significant write-offs ✅ Timely action - Don't leave uncollectible bills outstanding indefinitely ✅ Review patterns - Regular write-offs from same clients indicate problems ✅ Use correctly - Don't write off bills that might still be collected ✅ Keep records - Maintain documentation of settlement agreements ✅ Be consistent - Develop company policies on when to write off

Write-Offs vs. Other Options

Write-Off vs. Credit Note

Write-Off	Credit Note
Acknowledges amount is uncollectible	Issues credit for future use
Closes the bill	Creates a credit balance
No future benefit to client	Client can use credit later
For bad debt or settlements	For returns, errors, goodwill

Write-Off vs. Discount

Write-Off	Discount
Applied after bill is issued	Applied when creating bill
For collection issues	For pricing decisions
Reactive	Proactive
Shows on payment records	Shows on bill itself

Write-Off vs. Deletion

Write-Off	Deletion
Bill remains in system	Bill completely removed
Shows paid vs. written off amounts	No trace of bill
Maintains audit trail	Loses all history
Affects financial reports	As if never existed

Troubleshooting

Problem: Can't find write-off button

Cause: Bill not in correct status Solution: Can only write off bills that are "Invoiced" or "Outstanding". Can't write off draft bills or fully paid bills.

Problem: Write-off amount doesn't match expectation

Cause: Proportional distribution across selected items Solution: Review the calculation formula above. Select different items or adjust write-off amount.

Problem: Need to undo a write-off

Solution:

• Write-offs are generally permanent
• Contact your administrator
• May need to create a new bill and reverse the write-off through accounting adjustment

Problem: Write-off not showing on receipt

Cause: "Include write-off amount in receipt" option not checked Solution: This is an optional feature. If you want it to show, ensure you check the box when creating the allocation.

Related Topics

• Allocating Payments - Applying funds to bills
• Partial Allocations - Paying bills in installments
• Credit Notes - Issuing credits instead of write-offs
• Canceling Bills - Voiding bills vs. writing off
• Account Statements - View client payment history

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Need Help?

Write-off permissions may be restricted to managers or administrators. Contact your supervisor if you don't have access to the write-off feature.