Bad debt: deciding when to stop chasing and write it off
A bad debt is money you have decided not to collect. When to make that call, what the write-off actually involves, and why carrying it costs more than losing it.
The goods received note is the middle document of the three-way match. Skip it and you are paying invoices on the strength of someone remembering a delivery.
A goods received note is the record made at the point of delivery stating what physically arrived: which items, how many, in what condition, on what date, received by whom. It is raised by the receiving side, not by the supplier, and that is the whole reason it carries weight.
The supplier’s delivery note says what they claim to have sent. The goods received note says what you agree you got. When the two differ — short delivery, damaged carton, substituted item — the difference is recorded at the moment it is still provable, rather than argued about six weeks later when the invoice is queried.
The quantity-ordered column is what makes the note useful rather than decorative. A note that records only what arrived requires someone to fetch the order to see whether that was right; a note that shows both makes the discrepancy visible to the person holding the pallet.
Finance can pay an invoice without argument when three documents agree: the purchase order says what was agreed, the goods received note says what arrived, and the invoice says what is being charged. Remove the middle one and the match collapses into a two-way comparison of two documents that were both written by people who were not at the loading bay.
This is where quiet losses live. Invoices for full quantities against part deliveries, charges for items rejected on arrival, duplicate deliveries billed twice — each is individually small and none is visible without a receipt record. Businesses that introduce goods received notes usually find the first month pays for the effort.
Signing a carrier’s device for a pallet is not a goods received note. It confirms something arrived; it says nothing about whether the contents match the order. Where the delivery cannot be checked at the door, sign as unexamined and raise the note once it has been opened.
Because the order, the receipt and the invoice are three views of one transaction, they belong on one record rather than in three places. Ettex Invoices keeps the goods received note against the purchase order it came from, so the match is a state of the record rather than a task somebody performs, and a query about a short delivery is answered from the note instead of from memory. The same discipline that makes accounts payable predictable starts here, at the door.
The supplier issues the delivery note describing what they say was sent. The buyer raises the goods received note describing what was actually received and accepted. They are written by opposite parties and often disagree.
It is not required by law in most jurisdictions, but it is powerful evidence in a dispute about quantity or condition, precisely because it was made at the time of receipt by the receiving party.
The person who physically checked the goods. A signature from someone who was not present is worse than no signature, because it makes an unchecked delivery look checked.
Services use the same principle under a different name — a service entry or acceptance record confirming the work was performed before the invoice is paid.
A bad debt is money you have decided not to collect. When to make that call, what the write-off actually involves, and why carrying it costs more than losing it.
An aged debtors report groups what you are owed by how late it is. How to read the columns, which movement matters, and the mistake of looking only at the total.
Payment terms set when money is due, what happens if it is late, and when the clock starts. Which terms are worth negotiating and which are quietly ignored.