{"id":269734,"date":"2024-07-08T15:48:18","date_gmt":"2024-07-08T03:48:18","guid":{"rendered":"https:\/\/www.reckon.com\/au\/?p=269734"},"modified":"2025-05-29T16:35:27","modified_gmt":"2025-05-29T04:35:27","slug":"bad-debts-written-off","status":"publish","type":"sbh","link":"https:\/\/www.reckon.com\/au\/small-business-resources\/invoicing\/bad-debts-written-off\/","title":{"rendered":"Bad debts written off"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.23″ custom_padding_tablet=”” custom_padding_phone=”0px||||false|false” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on” da_disable_devices=”off|off|off”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.23″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_padding=”||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” locked=”off” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Copy paste body text here” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” locked=”off” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n

Throughout your business life, you\u2019ll likely have trouble with unpaid invoices and bad debts. In certain circumstances, you\u2019ll need to have these bad debts written off for tax purposes. So, when can you write off a bad debt?<\/p>\n

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Typically, a larger business gets their payments team to send a demand letter for unpaid invoices and then receives the payment. For small businesses’ unpaid invoices, the owner may simply send a few emails or make a few phone calls until the payment is made.<\/p>\n

But what happens when your client\u2019s financial position makes it doubtful that they\u2019ll pay the debt they owe to you? Or what if you have the misfortune of dealing with a\u00a0customer that\u00a0takes every possible action to evade their payment obligations? You may have to write off unpaid invoices.<\/p>\n

This is bad debt; one that you\u2019re unlikely to have repaid. What happens next? You may have to write off unpaid invoices, as it may provide your business with a tax-deductible expense.<\/p>\n

But when and how can you do this?<\/p>\n

Unpaid invoices<\/h2>\n

No matter what industry you work in, if you\u2019re self-employed or the head of a company, chances are you\u2019ll have experienced trouble with unpaid invoices<\/a>. This is also referred to as accounts receivable<\/a> (money you\u2019re owed for services provided).<\/p>\n

The problem is by no means limited to Australia. A survey conducted by the Commercial Collection Agency Association in the USA found that \u2013 as time goes by \u2013 the likelihood of receiving payment in full greatly diminishes.<\/p>\n

The findings showed that while most invoices are paid in full before the due date:<\/p>\n