Bad Debt Write Off
Overheads & DepreciationThis records debts that have been formally written off as uncollectable during the period. As an expense it normally carries a debit balance, matched by a credit that clears the amount from Debtors.
Real-world examples
Construction or contracting
A contractor writes off a £14,000 invoice after a client goes into liquidation before paying — a rare event, but often for a large single amount because contract values are high and cash flow is tied to a handful of major clients. The entry is a debit of £14,000 to 8100 (Bad Debt Write Off) for the full amount owed, including VAT — already accounted for when the original sale was invoiced — and a credit of £14,000 to the debtors control account, clearing the balance. The VAT itself can separately be reclaimed as bad debt relief on the VAT return once the debt is over six months old.
Retail or hospitality
A shop or restaurant is more likely to see a string of small write-offs — a bounced cheque, a disputed card chargeback, a corporate tab that's never settled — rather than one large bad debt. A £180 write-off is a debit of £180 to 8100 and a credit of £180 to the debtors control account. Individually trivial, but a business processing lots of small transactions can build a meaningful total here over a year, worth reviewing alongside till discrepancies (code 8206) for a pattern of loss.
Commonly confused with
Because code 8102 (Bad Debt Provision) sits right next to this one in Overheads & Depreciation, it's a common mis-posting target. Code 8100 is specifically for bad debt write off, while 8102 covers bad debt provision — similar in nature, but keeping them separate is what makes the overheads & depreciation section of your management accounts meaningful rather than a single lumped total.
What a mis-posting here costs you
An error posting to Bad Debt Write Off won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.