Customer Balance Write offs

What are Customer Balance Write-Offs?

Customer Balance Write-Offs represent customer balances (credits or outstanding amounts) that have been cleared from the books because they are stale, unresolvable, or otherwise no longer actionable. When a write-off is applied, the customer balance moves toward zero and a counter-balancing entry is recorded against recognized revenue.

When a write-off is applied:

1. Customer Balance decreases — The outstanding credit or debit is cleared
2. Recognized Revenue is adjusted — The counter-balance entry is recorded in the P&L
3. No payment or refund is created — Purely an internal accounting action with no gateway interaction

This row appears when a write-off is applied through the Adjust Customer Balance modal, not when balances are applied to invoices or refunded.

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When to Apply a Write-Off

Customer balances are typically written off when:

• A small lingering credit is no longer worth refunding
• An outstanding balance is deemed uncollectible
• A balance has remained on the account for an extended period without resolution
• The customer is unreachable and the balance cannot be reconciled
• Finance teams need to clean up account records for accurate reporting

Important: Consult with your accountant or finance lead before writing off significant amounts.

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Transactions Included

A balance adjustment appears in "Balance Write-Offs" when:

1. Applied this month: The write-off applied_at date is within the selected month
2. Adjustment type is Write-Off: The adjustment was created using the Customer Balance Write-Off type
3. Correct account and currency: Matches the selected account and currency

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Real-World Examples

Example 1 — Stale Customer Credit:

• Customer has a $25 credit balance from an old offline payment
• Customer hasn't been active for 2+ years and is unreachable
• Finance team writes off the balance with reason "Write off"
• Result in Write-Off Month:
  • Customer Balance: -$25 (credit cleared)
  • Recognized Revenue: +$25 (counter-balance entry)

Example 2 — Uncollectible Outstanding Balance:

• Customer has a $150 outstanding balance after multiple failed collection attempts
• Marked as a write-off with reason "Uncollectible"
• Result in Write-Off Month:
  • Customer Balance: -$150 (balance cleared toward zero)
  • Recognized Revenue: +$150 (counter-balance entry)

Example 3 — Partial Write-Off:

• Customer has a $80 credit balance
• Finance writes off $30 and leaves $50 active for future use
• Result in Write-Off Month:
  • Customer Balance: -$30 (partial clear)
  • Recognized Revenue: +$30 (counter-balance entry)

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Columns Affected

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Customer Balance

Customer Balance shows the amount being cleared from the customer's account.

Why Negative? You're removing balance from the account (either a credit you no longer owe the customer, or an outstanding amount you no longer expect to collect). The balance decreases, shown as negative.

Calculation: The exact write-off amount entered in the Adjust Customer Balance modal. Cannot exceed the available customer balance.

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Recognized Revenue

Recognized Revenue shows the counter-balance entry that offsets the cleared customer balance.

Why Positive? The write-off needs an offsetting entry to keep the books balanced. The recognized revenue column moves accordingly to reflect the cleared balance.

Calculation: Equal to the write-off amount applied to the customer balance.

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What Write-Offs Do Not Affect

To keep accounting clean and avoid unintended side effects, write-offs intentionally exclude:

• ❌ Account Receivable — Not affected (write-offs apply to customer balance, not invoices)
• ❌ Deferred Revenue — Not affected (no service obligation involved)
• ❌ Taxes — Not affected (no tax liability change)
• ❌ No refund record is created
• ❌ No payment transaction is created
• ❌ No interaction with payment gateways

If you need to issue an actual refund to the customer, use the Refund action instead. If you need to write off an unpaid invoice, use Mark as Uncollectible instead.