So you’ve identified that a certain receivable balance is impaired and the collection of the outstanding amounts is unlikely. Once you’ve done that, you ought to write those receivables down in the sense that you’d recognize a provision within the accounts receivable group on the balance sheet to show the amount between what was initially recognized and what you expect to get instead. For an example, if the original amount was 200 CU and now you’d estimate that you’d only get half of it, your provision should be 100 CU. The net receivable is thus 100 CU on your balance sheet. 

However, what if it turns out that the collection of the balance in any kind of amount is less than probable and in fact, you’re certain you won’t collect any of it. Such balances should be written off the balance sheet. Note here that the difference between writing a receivable down and writing it off the balance sheet lies in the estimate concerning the collection. Once a receivable becomes doubtful, it’s provisioned for, that is written down. By writing receivables down we still keep the records (i.e. name of the customer, amounts originally invoiced etc.) Once it becomes hopeless and we’re certain we won’t collect the amounts, it’s written off the balance sheet.

Something to remember when deciding if you should write a receivable down or off the balance sheet is that it doesn’t prevent you from pursuing the collection and eventually also collecting the balance. It’s one thing to accept the loss in current period and another to accept the loss.