Writing off an invoice

In business, not every invoice gets paid. Sometimes, a customer becomes unreachable, a small amount isn’t worth pursuing, or the debt is confirmed to be uncollectible. In these cases, instead of keeping the unpaid invoice open indefinitely, you write it off.

Writing off an invoice means you accept that the amount will not be collected and officially record it as a business loss. This helps keep your books accurate and avoids overstating your expected revenue.

How Wafeq Handles Invoice Write-Offs via Credit Notes?

In Wafeq, writing off an invoice is done by issuing a credit note linked to the same invoice, for the same customer, and in the same currency.

Normally, credit notes refund customers, but here, they act as a tool to:

• Cancel the unpaid amount without expecting payment.
• Reclassify the debt from Accounts Receivable to Bad Debts Expense.
• Maintain clean records by keeping the original invoice visible but settled.
• Reverse VAT (if applicable) by matching the original invoice’s tax rate.

Review the invoice to avoid mismatches when issuing a credit note

Before creating the credit note, start by reviewing the original invoice:

• Customer name, total amount, and VAT rate as you’ll need to enter these same values in the credit note.
• Also, confirm the invoice status is “Finalized”, not “Draft”. Only sent invoices generate accounting entries, and credit notes can only be linked to them.

To learn more on how to change the invoice status, refer to this guide

Create a credit note for the invoice

To begin writing off the invoice, you need to create a credit note for the invoice so click on “Sales” from the main menu, then select “Credit notes” and enter the “create” button.

This opens a blank credit note where you'll manually enter the exact details from the invoice:

• Customer name: Must match the original invoice exactly.
• Currency: Should be the same as the invoice’s currency.
• Description: You can use this field to explain the reason behind issuing the credit note. This could be something like:
  • Write-off.
  • Bad debt clearance.
  • Invoice uncollectible due to long overdue.
• Account: specify the account of the write off, for example Bad debt.
• Item(s) and total amount: Add the same product(s) and ensure the price and VAT rate match the invoice values.

After entering all the needed details, save the credit note and ensure its status is “sent” before linking it to the invoice.

To link the credit note to the invoice, go to “Sales” in the main menu, then click on “Invoices”, Switch to the “Table view” and click on the invoice you want to write off.

Click on “Apply credit note”.

Enter the total amount including tax next to the credit note used for the write-off, then click “Apply”.

To preview the write-off entry, go to “Credit Notes” under “Sales” in the main menu. Open the write-off credit note, then click the green book icon.

You'll be directed to the write-off entry in full which shows how Wafeq handles the write-off behind the scenes, by reducing the customer's balance from Accounts Receivable, recording the amount as a Bad Debt Expense, and reversing any related VAT.

The write-off is now complete. The invoice is settled, and your reports are instantly updated.