Write off many invoices and bad debts at once: a guide for Xero users

Small balances nobody will chase, a customer that has closed down, an old batch of invoices that will never be paid. Sooner or later they have to come off the books. Xero's method is a credit note applied to each invoice, and Xero's pages describe it one invoice at a time. This guide covers that method, the tax question that comes with it, and how to write off a whole selection in one run.

Checked against Xero Central on 12 October 2026.

The native way, for one invoice

Xero's article on recording a bad debt says the method depends on your sales tax registration and on how you want the transactions to show in your reports, and recommends asking your accountant or bookkeeper. On the invoice basis, you apply a credit note to the outstanding invoice and categorise it to a bad debts account. On the payments basis, it suggests a manual journal instead. For the credit note method, the steps are:

1. Find the invoice, click the menu icon and select Create and apply credit.
2. Choose the account: the same account code as the original invoice, or your bad debts account.
3. Check the date, the tax rate and the credited amount.
4. Clear any tracked inventory code. If the Item Code field holds one, Xero says to remove it, or the credit note increases the item's quantity and value.
5. Click Approve. You are taken back to the invoice, which shows the amount credited and what remains (Add a credit note to a customer's invoice).

The credit note can be for some or all of the outstanding amount. For a supplier bill the mirror is Add Credit Note under Bill Options (Add a credit note to a bill). If the customer pays later, Xero's answer is a receive money transaction using the same account as the credit note, plus a reversal of the journal if you posted one.

Where the native way runs out

• One invoice at a time. The pages above describe Create and apply credit from a single invoice, and none describes a bulk version. Xero points to apps in its App Store that apply credit notes automatically. For 150 small balances by hand, that is 150 rounds of five steps.
• Every credit note is a fresh chance to get it wrong. One wrong account or tax rate repeated across a batch means a batch of corrections.
• The tax treatment is yours to decide. Xero's warning is to consider the tax implications when choosing an account and to talk to your accountant or bookkeeper.
• Currency must match. Xero says an awaiting payment invoice can only be credited by a credit note in the same currency.
• Lock dates apply. After a lock date is set, users can't add or edit transactions dated on or before it (Set up or remove lock dates). A credit note is a new transaction with its own date, which has to fall after the lock date.
• Undoing it is manual too. You open the credit note and remove the allocation with the remove icon; the credit note and invoice then return to awaiting payment (Remove a customer credit note allocation). The credit note itself is still there to deal with.

The faster way: Unapprove

Unapprove is a web app that works with Xero. Its Write off run does the credit-note method for a whole selection of approved invoices and bills that still have money owed on them.

What it does

• You sign in at Xero, choose the organisation, filter, select and preview. The preview writes nothing.
• You choose three things once for the run: the account (an expense account, usually bad debts, for sales invoices; an income account for bills), the write-off date, and the tax treatment. The date can be today or earlier, but must be after your lock date. The tax treatment is either "No tax effect" or "Reverse the document's tax".
• For each document it raises one credit note for exactly what is still owed, with a single line and no item code, so tracked inventory is not touched. The credit note carries a reference starting WO and the document number, and is allocated to the document.
• Nothing is trusted on a 200. The document is read back from Xero, and the write-off counts only if it shows as paid with nothing owed. Otherwise the credit note is voided and the document is left as it was.
• A history note goes on the document and on the credit note.
• You confirm by typing the count, for example WRITEOFF 40.

What it skips, and tells you why: documents that are not approved or have nothing owed, a write-off date on or before your lock date, documents processed in the last 24 hours, and documents for an archived contact, because Xero will not raise a credit note for one (why). With "Reverse the document's tax" it also skips documents whose lines use more than one tax rate, because a single credit note line can reverse only one. Part-paid and part-credited documents are written off for the balance that remains, and foreign currency documents in their own currency.

Undo. For 30 days after a write-off run finishes, you can reverse it from the job page by typing UNDO and the count. Each credit note's allocation is removed and the credit note is voided. A document is skipped if its credit note is no longer allocated to it, if it has been voided since, or if the write-off date now falls in a locked period.

What it does not do: choose your account, or tell you which tax treatment is right. That depends on your country and situation, and Unapprove gives no tax advice. It does not record a payment received later.

What access it asks for: your name and email to sign you in, read and write on invoices and bills, read and write on attachments, and read-only on organisation settings and contacts. The account list comes from the read-only settings permission.

Price: free for 14 days, with unlimited previews and three documents processed in total. After that, $29 per month per connected organisation, or a one-off $49 Clean-up Pass for 7 days and up to 500 documents. Write-offs are included in both. Prices are in US dollars and exclude VAT and sales tax (added at checkout); the pricing page has the details.

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Related reading: whether to void or issue a credit note when an invoice is wrong rather than unpaid, and the year-end checklist for deciding what to clear before the lock date.

Questions

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