How to Write Off Unpaid Invoices in Xero

Updated on:

April 6, 2026

By:

Madhav Bhandari

Use this interactive demo to learn how to write off unpaid invoices in Xero.

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It is very easy to write off unpaid invoices in Xero. Here’s a quick tutorial on how to do it in simple steps:

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On Xero's main dashboard, head over to the top menu bar and click 'Business'.
Select 'Invoices' from the list of options.
After that, tap the 'Awaiting Payment' tab to proceed.
Find and open the unpaid invoice you want to write off.
Subsequently, click the 'More Options' button in the top-right corner.
Pick 'Create and Apply Credit' from the choices.
Once done, review the details and click 'Approve' or 'Save'.
After completing these steps, the unpaid invoice from your Xero account will be written off instantly.

📌 Why this matters

Writing off unpaid invoices removes them from your accounts receivable, giving you an accurate picture of money you can actually expect to collect. This cleanup directly impacts your cash flow forecasting and financial reporting.

Beyond the obvious accounting benefit, written-off invoices become bad debt expenses that may qualify for tax deductions, potentially reducing your taxable income. Your financial statements will also look more credible to lenders and investors when they reflect realistic collection expectations rather than inflated receivables from customers who clearly aren't paying.

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