Glossary
What is bad debt?
A bad debt is money owed to you that you've decided you can't recover.
Writing it off removes it from your receivables. Following up early and consistently is the best way to keep bad debts low.
Example
A customer's business closes owing $900, so you write the invoice off as a bad debt.
In Australia
Talk to your accountant about how bad debts affect your GST and income tax.
General information only, not legal or financial advice.