Enter your idea

@Ethan M - I don't think you have read the comments from your users here.

To dismiss something that we (as paying users) are requesting is not ideal and cements the idea that you're a software developer company completely disinterested in the needs of your clients.

There are multiple reasons why the 'existing methods' are not ideal. They are workarounds. Workarounds that most of your competitors don't have to use.

Can we have some engagement with your clients to have some understanding of what is needed. Remember the 'new invoicing' debacle? I would personally like to speak to someone who decides these things and find out where their head is at.

I have written off invoices as bad dept, ie. applied a credit note and now the invoice shows 'paid' - just not by the client, but by 'bad debt'. I would like to have the ability to disable the client's ability to call up that invoice AND be able to send the invoice out again .... hope dies last.

The workaround recommended by support was 'creating a pdf' of the invoice before applying the credit note. Sigh ... that just creates another interface and problem storing, and so on ....

I agree that the way Xero deals with bad debt is quite frankly embarrassing ! I know of no other accounting system that is so ham-fisted, even the most basic accounting systems (such as Starling's inbuilt system) deals with it better than Xero. Needing to raise a credit note is just wrong - I do not want a credit note showing on the customer account as this appears to any user of the system as if we, the business, have authorised this reduction their account. Also, there is a risk that the "credit note" might get sent to the client, another big no-no. Please Xero, you need to do better!

I too have to wonder why, with all those interested in this feature; has chosen not to implement it. It IS after all a NORMAL accounting feature. Is Xero not an accounting system?

Ways I've written off bad debts:
1. Create an expense account called "Bad Debts Written Off" and mark it as being able to receive payments. "Pay" the invoice to the bad debt expense account; or
2. Void the invoice (with or without a note); or
3. Add an item into the invoice which links to the bad debt account (from #1) and add a negative amount to zero the invoice out.
Options 1 and 3 are more "obvious" as you see the words "bad debt" in there somewhere. They have different timing though, as 3 will have the expense timed with the invoice (which may be after BAS is filed, requiring an adjustment later/EOFY) but option 1 can be timed when you actually write off the invoice.
Option 1 is my "go to" solution here as it reflects the timing properly and is easily identifyable as a cost on the P/L.
I do agree that a more consistent way of doing this and knowing what the impacts will be would be useful.

Why is there no plans to introduce this?

Hi Zvi

You can do a minor adjustment when reconciling - its at the bottom of the page
#3 "The sum of your selected transactions must match the money spent. Make adjustments, as needed." - select "minor adjustment"

Even for writing off a part of a bill (eg where a client paid 1p too little) would be simpler to write off

What a shame that Xero, again, decides to ignore important requests that are needed to be fully HMRX/Tax compliant.
A credit note to write off a bad debt is, as far as we know and checked with HMRC, actually the wordt way to do so ....

If the credit note method is the only way to write off a bad debt then surely the system could show the invoice status as "written off" if the account used is Bad Debt rather than Sales. That should not be a difficult thing to implement.and more accurately reflects the status of the invoice and should allow for reports to be developed to show this information.

We know how to do it - but we want it to be easier; Is the invoice older than six months after end of trade credit terms tec etc. I don't think that xero's suggested way of accounting for any bad debt recovery actually agrees with Uk HMRC requirements; I think a bad debt recoveries account may be required; code the cash received to that account and deal with the VAT element accordingly - which I think should be reported in the Sales and Output VAT sections of a VAT Return; the bad debt recoveries account can be netted off the P&L reporting for bad debts; then there is no need to look at reversing bad debt journals.

we have had so many of these in the past 2 years during covid and now they are sitting there making my work Harder if only I could write them off and they don't keep popping up on my reports.

We have a company in Dubai and it is illegal to raise a credit note for a Bad debt, So we would need an alternative way of doing this.

Xero only interprets credit allocations as cash transactions which is inaccurate when running Cash reports ie P&L as the write off is not cash received - it is quite the contrary. Couldn't Xero recognise the Source - that denotes it as a receivable credit note -write off - and not treat it as Cash