direct write-off

Bad Debt Write-Offs for Contractors: When, How, and What to Do First

Contractors eventually hit receivables they can't collect. A disputed retention piece, a bankrupt owner, a GC who just won't pay the final draw. Writing the balance off requires a specific process — exhausting collection steps, documenting the judgment, applying the right accounting method, and claiming the tax deduction in the right period. Rushing to write off too fast loses value; delaying too long distorts the balance sheet.