2 min read
Definition
A write-off records that a debt owed to the business will not be collected, removing it from the books as a loss. It follows when a customer becomes insolvent or a debt is clearly uncollectable, turning an earlier provision into a realised loss.
Why it matters
Bad debts hit both profit and cash, straining affordability. Reducing them through credit control and prompt collection protects your borrowing capacity. See improving cash flow.
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