Bad debt write-off credit note template
Bad debt write-off credit note template: clear an uncollectable invoice from your books line by line, with the collection steps recorded and the tax checked.
Templates by industry
- Brochure print run, 2,000 copies
- Delivery to three branches
- Artwork changes after proof
Preparation guide
Example workflow
Identify the invoice and the reason
Example: for "Brochure print run, 2,000 copies", find the original invoice, note its number and date, and record the reason: a return, a price reduction or a cancellation.
Credit the affected lines
Enter the quantity or amount credited for each affected line, down to "Artwork changes after proof", so the tax on it is reversed in proportion.
Send and settle the credit
Send the credit note to the customer, then refund the amount or set it off against the next invoice, and keep both documents together.
When reminders, calls and perhaps a collection agency have all failed, an unpaid invoice eventually has to leave the receivables list. Many bookkeeping systems do this with a credit note against the open invoice, posted to a bad-debt account. This template is that internal record: it names the invoice, credits its lines, and keeps the reason and the collection history together. Whether the customer receives it, and how any tax is recovered, depends on your tax rules.
Fields to prepare
- Deliverables and line items
- Brochure print run, 2,000 copies, Delivery to three branches, Artwork changes after proof: only the lines being reduced or cancelled, with the quantity or amount credited.
- Brochure print run, 2,000 copies
- Credit each line exactly as it was invoiced, so the write-off matches the original document line for line.
- Delivery to three branches
- Delivery charges belong to the same unpaid invoice and are written off with it, not left open on their own.
- Artwork changes after proof
- If part of the invoice was disputed rather than unpaid, settle that part first with a separate credit note and its own reason.
- Original invoice
- Quote the number and date of the invoice being corrected, and the reason: a return, a price reduction or a cancellation.
- Settlement
- Say how the credit is settled: refunded to the customer or set off against the next invoice.
- Scope to agree
- Refer to the unpaid invoice, record the collection steps taken and the reason for writing it off, and decide with your adviser whether the customer receives a copy.
Before sending
- Is “Brochure print run, 2,000 copies” one of the lines being corrected, at the price on the original invoice?
- Is the quantity or amount credited for “Delivery to three branches” no more than was invoiced?
- Does the customer know why “Artwork changes after proof” is credited: a return, a price change or a cancellation?
Show 3 more
- Credit only the affected lines, and reverse the tax on them at the rate the original invoice used.
- Give the credit note a number of its own rather than reusing or changing the original invoice number.
- Agree with the customer whether the credit is refunded or set off before you send it.
Worked example: writing off a print job that was never paid
The figures are an example, with an example tax rate of 8%. Invoice INV-2026-0931 for a brochure run, three branch deliveries and artwork changes stayed unpaid through two reminders, a final notice and a collection agency’s attempt. The printer writes the whole invoice off.
- Lines: every line of the original invoice, credited in full.
- Notes: the dates of the reminders and the agency’s closing report.
- Tax: shown in proportion here; whether it can be reclaimed is a question for your adviser.
| Item | Credited / billed × unit price | Amount |
|---|---|---|
| Brochure print run, 2,000 copies | 1 / 1 × $1,850.00 | $1,850.00 |
| Delivery to three branches | 3 / 3 × $40.00 | $120.00 |
| Artwork changes after proof | 1 / 1 × $260.00 | $260.00 |
| Credit before tax | $2,230.00 | |
| Sales tax (8%) | $178.40 | |
| Credited | $2,408.40 | |
| Original invoice | $2,408.40 | |
| Remaining on the invoice | $0.00 | |
The credit is $2,230.00 plus $178.40 tax, $2,408.40 in all, which is the whole of the original $2,408.40. The invoice now shows $0.00 outstanding in your receivables.
Common mistakes when writing off a bad debt
- Sending the write-off to the customer as if the debt had been forgiven.
- Writing off before the collection steps are documented.
- Reclaiming tax without checking the conditions for bad-debt relief.
- Leaving out the number and date of the original invoice.
- Deleting the original invoice instead of crediting it.
What the document must show
These details make a credit note easier to approve and to file.
- A number of its own and the issue date
- The number and date of the original invoice
- The reason: a return, a price reduction or a cancellation
- The lines being credited, with quantity and amount
- The tax being reversed, and the total credit
- How it is settled: a refund, or set off against the next invoice
The sales tax depends on where the work is supplied, so set the rate that applies to your customer before sending.
Official rate reference: US government: state and local taxes
Frequently asked questions
Should I send this credit note to the customer?
Usually it is an internal record that clears the invoice in your books. Sending it can read as forgiving the debt, and in some tax systems it changes the customer’s tax position too. Ask your adviser before anything goes out.
Does writing off the invoice mean I give up the debt?
No, not unless you tell the customer so. The claim can still be pursued; if money arrives later, record it as a recovery and check whether any tax relief you took must be reversed.
When is an invoice old enough to write off?
Your accounting policy and the tax rules decide. Many rules ask for evidence of collection efforts or a minimum period overdue before a write-off counts for tax, so keep the reminders and letters on file.
Can the tax on the invoice be recovered?
Often through a bad-debt relief scheme with its own conditions, which may run through the tax return rather than through a credit note. Ask your adviser how it works where you are before you reduce the tax you owe.
Can I write off only part of an invoice?
Yes. Credit the lines or the amount you no longer expect and leave the rest open, for example when a customer in insolvency proceedings is expected to pay a share.
How is tax calculated on this template?
The sales tax depends on where the work is supplied, so set the rate that applies to your customer before sending. The editor keeps the net amount, the tax and the total apart, and recalculates all three when you change a quantity, a unit price or the country setting.
Can I download it as Excel, Word or PDF?
Yes. A PDF needs no account: fill in the template and use Print / PDF. The Excel and Word files download from this page with a free account, and the spreadsheet keeps its formulas, so changing a quantity updates the tax and the total.
Read next
Reading for the Bad debt write-off credit note template: Credit note vs invoice (and credit memo): how to issue one and Unpaid invoice: follow-ups, part payments and statements. The VAT and GST calculator helps you credit the tax that went with the goods.