A bad debt write-off is the removal of an uncollectible debt from a company’s financial records. This is typically done when it is determined that the debt is unlikely to be collected, either because the debtor has filed for bankruptcy or because the statute of limitations has expired.
Bad debt write-offs can have a negative impact on a company’s financial statements, as they reduce the company’s assets and increase its expenses. However, they can also be beneficial, as they allow companies to clean up their books and improve their financial position.