How to write off a debt at the year end

An irrecoverable debt is money a customer owes that the business no longer expects to receive.

• The customer has gone into liquidation and has nothing left to pay suppliers with
• The customer cannot be traced
• The debt is old and every attempt to collect it has failed

At the year end each customer's balance is reviewed. A debt that will never be paid is not an asset. Leaving it in trade receivables overstates the assets and the profit.