What should I do when a customer will not pay an invoice?

Question

Expert Bookkeeping Services · Accepted Answer

Confirm the debt is valid, follow a documented collection process and assess whether it is recoverable. A write-off, impairment or tax bad-debt claim requires the appropriate evidence and local treatment. Investigate before writing it off Check that the invoice reached the customer, payments were not misallocated and the balance is not disputed. Keep records of reminders and agreed repayment plans. Consider the customer's financial position and contractual rights. A late invoice is not automatically a bad debt, and deleting it from the software can destroy the audit trail. Record the accounting and tax effects Under accrual accounting, an uncollectible balance may require an allowance or write-off. Income-tax deductibility and VAT or GST relief have their own conditions and timing. Ask your adviser to review material balances, then use supported credit or journal processes with a clear explanation. If money is recovered later, record it consistently and review any earlier tax relief.

What should I do when a customer will not pay an invoice?

Short answer

Detailed answer

Investigate before writing it off

Record the accounting and tax effects

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