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Invoice Write-Off

Zuora

Invoice Write-Off

This feature is only available if you have the Invoice Settlement feature enabled. The Invoice Settlement feature is in Limited Availability. If you want to have access to the feature, submit a request at Zuora Global Support

Occasionally, you might want to write off unpaid invoices or partially paid invoices when you are sure that the invoice balance is uncollectible.

For example, your end customers who receive an invoice might fail to pay the invoice timely. After attempting to collect payment to settle this invoice for a certain period (for example, 90 days past due), you might want to declare the invoice as bad debt. At this point, you might want to write off the unpaid invoice to reduce the account receivable balance.

Overview

By writing off an invoice, a credit memo is created and applied to the invoice. The generated credit memo items and credit memo taxation items are applied to the corresponding invoice items and invoice taxation items respectively. If an invoice is written off, the balance of each invoice item and invoice taxation item must be zero after the write-off.

You can write off invoices in any of the following situations:

  • An invoice is never settled by any transactions such as payments or credit memos.
  • An invoice is partially settled by some transactions. For example, any payments or credit memos are applied to an invoice. In this case, only the unsettled part of the invoice can be written off.

The following table lists the specific invoice write-off scenarios:

Invoice Invoice item Credit memo item created Credit memo created
Invoice with a non-zero balance
  • Invoice item: with a non-zero balance
  • Corresponding taxation item: with a non-zero balance 
  • Credit memo item: with a non-zero balance
  • Corresponding taxation item: with a non-zero balance 
Credit memo with a non-zero balance
  • Invoice item: with a non-zero balance

  • Corresponding taxation item: with zero balance

  • Credit memo item: with a non-zero balance
  • No corresponding taxation item created 
  • Invoice item: with zero balance
  • Corresponding taxation item: with a non-zero balance 
  • Credit memo item: with zero balance
  • Corresponding taxation item: with a non-zero balance 
  • Invoice item: with zero balance
  • Corresponding taxation item: with zero balance 
No credit memo items or corresponding taxation items created
Invoice with zero balance
  • Invoice item: with a non-zero balance
  • Corresponding taxation item: with a non-zero balance 
  • Credit memo item: with a non-zero balance
  • Corresponding taxation item: with a non-zero balance 
Credit memo with zero balance
  • Invoice item: with zero balance
  • Corresponding taxation item: with zero balance 

N/A

Invoice write-off is not allowed.

N/A

Invoice write-off is not allowed.

You can only write off invoices in Posted status. If any exception occurs during invoice write-off, the operation will roll back.

You can write off invoices through the Zuora UI or REST API, even in a closed accounting period. See Write Off Invoices and PUT Write off invoice for more information.

After you write off an invoice, Zuora sets some taxation item fields of generated credit memo items by copying values from the corresponding invoice taxation items. The values of the following taxation item fields are copied:

  • taxRate
  • exemptAmount
  • taxRateType

Limitations

You cannot write off invoices in any of the following situations:

  • The balance of an invoice has been changed before Invoice Settlement is enabled.
    For example, before Invoice Settlement is enabled, any credit balance adjustments, invoice item adjustments, or invoice adjustments have been applied to an invoice.
  • All items of an invoice have zero balance. For example:
    • All items including invoice items and taxation items have zero amount when the invoice is generated.
    • An invoice has been fully paid by credit memos or payments, and all items of the invoice have zero balance.
  • An invoice contains more than 750 items in total, including invoice items, discount items, and taxation items. 
    If the limit is reached during invoice write-off, perform the following steps:
    1. Create a credit memo from a set of invoice items in the invoice. The number of affected items must be less than 750.
    2. Apply the credit memo to the invoice by specifying the invoice items, which the credit memo items are applied to.
    3. Repeat step 1 and step 2 to offset the remaining invoice items.