A request to write off a debt may concern accounting, compromise or a legal release. Clarify what the customer is asking you to give up.
Corporate Recovery Partners
01 / 06
The customer asks for a clean slate
A wholesaler receives an email asking it to write off a longstanding account because the customer's business is struggling. The customer offers no payment and wants written confirmation that the balance is finished. The wholesaler needs to assess the commercial position and the meaning of the requested document before answering.
Ask whether the customer seeks more time, a reduced settlement or an unconditional release. Avoid assuming write-off has the same meaning in both businesses' records.
An accounting decision and a legal agreement about liability are different matters. Have the accountant and lawyer explain what the proposed action would change before sending a final confirmation.
Ask for a credible explanation of the inability to pay and any realistic proposal. Record what is supported and what remains uncertain. Do not demand private access or threaten unrelated people to obtain information.
Business.gov.au recommends considering ability to pay when assessing court action. The commercial question is what can realistically be recovered, not merely whether the invoice remains on the ledger.
Consider a manageable schedule, a supported partial settlement, professional recovery or ending active pursuit. Compare future cost and likely recovery rather than treating past chasing time as a reason to spend indefinitely.
If the customer is in formal insolvency, follow the relevant process and obtain advice before agreeing separately. Its status can materially affect available options.
If agreeing to compromise, specify the conditions and claims affected. If only making an accounting adjustment, obtain advice on suitable communications and records rather than implying a legal release unintentionally.
Retain the evidence and approval for the decision. Review credit controls before further trading so a fresh account does not recreate the exposure immediately after the old one is addressed.
