Write-off

Definition

A write-off recognises in the accounts that something has lost its value: a customer debt that will not be paid becomes bad debt and is written off, or a worn-out asset is removed because it no longer holds worth. It is an accounting reality check rather than a cash event.

In plain terms

It is the moment a business stops pretending it will get paid, or that an asset is still worth something, and adjusts the books accordingly. Frequent write-offs of customer debt point to a credit control problem worth fixing. A write-off by a lender — forgiving a debt — is rare and different from refinancing, which restructures a debt that is still owed.