When to create a write-down of receivables?

Write-down is created when there is concrete evidence that the receivable is doubtful, disputed or overdue. The basis is the prudence principle in accounting law — if payment is at risk, we must create a write-down.

What percentage of receivables should the write-down be?

The law does not specify strict percentages. The write-down should reflect realistic assessment of chances to recover the receivable. Typically: 30% for delayed, 50-70% for disputed, 100% for uncollectable.

What accounting entry for write-down receivables?

Account 280 'Write-down of receivables value' is parallel to receivable accounts. Debit costs (761/751), credit write-down account 280.

Does write-down reduce income tax?

Yes. Write-down is a tax deductible expense. It reduces income subject to tax in the annual income tax return (PIT or CIT).

What happens if debtor pays after write-down?

When debtor pays, we reverse the write-down. Entry: Debit write-down account 280, Credit income account 751. This is income because we previously recorded an expense.

Write-down of receivables — when and how to create?

Published: April 7, 2026 Author: Tomasz Dąbrowski Category: Accounting

Write-down of receivables is a tool that allows businesses to reflect the true value of assets. When to create it, how to calculate the amount, and what are the tax consequences — learn all the nuances.

What is Write-down of Receivables?

Write-down is a correction to the value of receivables in accounting books. It is created when there are justified doubts about the ability to recover the full invoice amount from the debtor.

In practice: if you sold goods for 10,000 PLN, but the client has financial troubles and will probably pay only 7,000 PLN, you can create a write-down of 3,000 PLN. As a result, financial results decrease by this amount, and the balance sheet reflects the true value of the receivable.

Prudence principle — legal basis

The obligation to create write-downs comes from the prudence principle in the accounting law. This principle states that all threats and losses that became known before the financial statements are prepared must be recorded in the books.

We don't wait for the debtor to officially declare bankruptcy — it's enough that there are signs indicating payment is at risk.

Types of Receivables Requiring Write-downs

The law distinguishes several categories of receivables that should be covered by write-downs:

Doubtful receivables

These are receivables where there are doubts about their recovery. Signs include:

Non-payment despite previous reminders
Known information about debtor's financial troubles
Non-response to correspondence
Published information about insolvency

Disputed receivables

These are receivables contested by the debtor — for example, over product quality, delivery, or pricing. In this case:

Debtor formally contests the obligation
Parties may be in court proceedings
Different positions exist about the debt amount or validity

Overdue receivables

These are receivables where all payment deadlines have passed. However, not every invoice delayed a few days is overdue — this refers to significant delays (months).

How to Calculate Write-down Amount?

The law does not impose strict percentages — it's about realistic assessment of loss.

Practical guidelines

Receivable type	Risk assessment	Typical write-down
Overdue 30 days	Low risk	0-10%
Overdue 60-90 days	Medium risk	20-30%
Overdue 180+ days	High risk	50-80%
Disputed (court proceedings)	Unknown	50%
Bankruptcy/insolvency	Very high	90-100%

Concrete example

A shop client owes 15,000 PLN for delivery. Due date was March 30, 2026, today is April 30. Client has financial troubles and stopped working with you.

We estimate recovery chances at 50% (7,500 PLN), the rest is likely loss. Write-down: 7,500 PLN (50% of receivable).

Accounting for Write-downs — Practical Entries

Write-downs are recorded using account 280 "Write-down of receivables value".

Entry to create write-down

Scenario: Creating write-down for doubtful receivable

Receivable: 10,000 PLN
Write-down: 30% = 3,000 PLN

Accounting entry:
Debit 761 (Other operating costs) 3,000
Credit 280 (Write-down of receivables) 3,000

In financial statements:
Account 130 (Receivables) = 10,000 PLN
Less: 280 (Write-downs) = (3,000) PLN
Net value: 7,000 PLN

Increasing write-down if debtor's situation worsens

If the debtor's situation deteriorates and you need to increase from 3,000 PLN to 7,000 PLN:

Entry for additional write-down

Additional write-down: +4,000 PLN

Entry:
Debit 761 (Other operating costs) 4,000
Credit 280 (Write-down) 4,000

New account 280 balance: 7,000 PLN (previous 3,000 + new 4,000)

Reversing write-down when debtor pays

The debtor paid 10,000 PLN (full amount). The write-down is no longer needed:

Entry to reverse write-down upon payment

Payment: 10,000 PLN
Write-down to reverse: 7,000 PLN

Entry 1 — record payment:
Debit 130 (Bank account) 10,000
Credit 130 (Receivables) 10,000

Entry 2 — reverse write-down (income):
Debit 280 (Write-down) 7,000
Credit 751 (Other operating income) 7,000

Annual Review of Write-downs

At year-end, all receivables must be reviewed and write-downs reassessed.

Review procedure

Analyze receivable age — which became overdue since last review
Verify debtor information — any new info about their financial condition
Review lawsuits — are proceedings ongoing
Reassess write-down amount — is current write-down sufficient
Document changes — record justification for each adjustment

Income Tax and Write-downs

Write-downs affect income tax — their amount reduces income subject to taxation.

Which write-downs are tax-deductible?

Not every write-down is a tax deductible expense. Only write-downs meeting these conditions count:

Write-down has material justification (real evidence of threat)
Receivable arose from business activity
Write-down doesn't exceed receivable's book value
Documentation is complete (justification memo)

Tomasz Dąbrowski

Age: 52 years

Certificate: Certified Auditor

Education: Master's from SGH (Warsaw School of Economics)

Experience: 22 years in auditing, accounting and tax consulting

Tomasz specializes in asset quality assessment, including true value of receivables. He has conducted many audits analyzing write-downs and assessing their adequacy to actual conditions.