USA Write off bad debt or delete invoice

[eaglesfan146]

When a company writes off a bad debt (customer did not pay invoice), it shows as an expense so if effects the bottom line. Technically, the labor and material on the invoice has already been expensed.
When doing a P&L report, the bad debt is subtracted from income. This is great at tax time but not when using the P&L to apply for credit, bank accounts or a loan.

 

[Victor Shah]

Bed Debt is an expense!
Reading your question, you are thinking of two options.
1. Writing off Bed Debt
2. Deleting the invoice.

In both the cases, the effect on bottom line will remain same.

For example, if your invoice is of $1,000. If you delete the invoice, that will reduce your bottom line by $1,000 (reducing revenue by $1,000).
And in the same case, if you write it off as bed debt expense, that will too reduce your bottom line by $1,000 (increasing expense by $1,000)

SO in most ideal situation, you should write it off as bed debt so that you can also claim in your taxes.

I hope this makes sense to you!

 

[eaglesfan146]

You are correct! Bad debt it is.
Thank you!