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How to write off a bad debt in Xero: one invoice, or a whole batch

Xero has no write-off button. You raise a credit note against each unpaid invoice, which is fine for one and slow for forty at year end. Here are Xero's steps, the tax checks to make first, and a way to clear a batch in one confirmed run.

The short answer

Apply a credit note to the unpaid invoice and code it to a bad debts account. Xero's article Write off a bad debt in Xero gives this method and recommends asking your accountant or bookkeeper, because the right one depends on your tax registration and reporting.

There is no bulk version. The request on Xero's ideas board has been open since May 2022 and had 775 votes on 7 November 2026. Xero's reply of 10 March 2026 says "specific bad debts functionality isn't planned for invoices or bills at this time".

Write off one invoice in Xero

  1. Find the invoice, click the menu icon and select Create and apply credit.
  2. In the Account field, select your bad debts account, or the same account code as the original invoice.
  3. Check the date, the tax rate and the credited amount, which can be some or all of what is owed.
  4. If the Item Code field holds a tracked inventory code, remove it, or the credit note increases the item's quantity and value.
  5. Click Approve.

On the payments basis for GST, Xero suggests the invoice's own account and tax rate on the credit note, then a manual journal at the No GST rate for the sale and the bad debts expense. If the customer pays later, add a receive money transaction on the credit note's account and reverse any journal.

Only a wrong invoice? Read how to unapprove an invoice in Xero.

Check the tax first

This is general information, not tax advice. The treatment depends on your country, registration and accounting basis, so ask whoever does your books.

  • UK. VAT Notice 700/18 ties bad debt relief to writing the debt off in your VAT accounts and to 6 months passing after the later of the due date and the supply date. Its section 5.6 says not to issue a credit note simply because a customer has not paid, so settle this with your accountant first.
  • Australia. GST ruling GSTR 2000/2 covers adjustments when a debt is written off as bad or has been overdue for 12 months or more.
  • Lock dates. The credit note's date has to fall after your lock date.

Where doing it by hand stops

Every invoice is its own round of those steps. One wrong account repeated across a batch means a batch of corrections, and taking one back means removing the allocation and then dealing with the credit note.

Option: Unapprove

Unapprove is a web application for Xero users. Its Write off run applies the credit note method to a selection of approved invoices and bills.

  1. Connect and filter. Narrow the list with Min. days overdue, Owing less than, contact and date, then select. The preview writes nothing.
  2. Choose three things. The account, the write-off date and the tax treatment: "No tax effect" or "Reverse the document's tax". Unapprove preselects neither tax option and no account for sales invoices.
  3. Confirm once. Type the count, for example WRITEOFF 40. One run takes up to 50 documents, so 60 invoices take two runs.
  • Exact amounts. Each document gets one credit note for exactly what is still owed, so a part-paid invoice clears for its balance. A foreign currency invoice clears in its own currency at Xero's day rate, not the invoice's rate, so check any currency gain or loss.
  • Read back. A write-off counts only when Xero shows the document paid with nothing owed. Otherwise the credit note is voided and the document stays as it was. The result CSV lists each credit note.
  • Not twice. A document with nothing owed, or processed in the last 24 hours, is skipped with the reason. So is a date on or before your lock date, an archived contact, and, with "Reverse the document's tax", lines using more than one tax rate.
  • Undo. For 30 days, type UNDO 40: each allocation is removed and each credit note voided. A document is skipped if its date has since been locked or its credit note is no longer allocated, for example after you removed it to record a payment.
  • What it does not do. It does not write off part of a balance, use a tax rate other than the document's own, record a payment received later, or tell you which tax treatment is right.

Disclosure. Atesen Software, which publishes this guide, makes Unapprove. The steps above work without it, one invoice at a time.

Price. Preview is free. The free trial costs $0, needs no card and processes 3 documents within 14 days. Monthly is $29 per connected organisation. The Clean-up Pass is a one-off $49 for 30 days with unlimited documents and no renewal. Prices exclude VAT and sales tax. Founding offer: FOUNDING40 takes 40% off your first payment until 30 November 2026, applied at checkout, so the pass comes to $29.40. You can ask for a full refund within 14 days of that first payment if you have not processed a document with it. Checkout is by Paddle on the Unapprove site.

Preview my overdue invoices free About Unapprove

Which route fits

  • One or two invoices, or part of one: Xero's steps, free.
  • A batch, once the account and tax treatment are agreed with your accountant: a tool such as Unapprove.

Atesen Software is independent. Xero is a trademark of Xero Limited, and this page is not affiliated with or endorsed by Xero. Xero Central, the Xero ideas board, GOV.UK and the ATO were checked on 7 November 2026; these can change.

Questions about this guide: support@atesensoftware.com.