This is an expense as a result of you not being able to collect the entire amount from your customer that you had sitting in the money you're owed account.

When you deliver services or goods to a client, invoice them for the work or goods and they refuse to pay you or they go bust as a company. You should write off the amount that you had outstanding from them as a bad debt.

When you reverse an invoice because you raised it for the wrong amount, this is not classed as a bad debt.

*Please do note this category is not viewable to users. The category is automatically posted when writing off an invoice, and shows on user reports.