What can write-offs in Accounts Receivable be used for?

Write-offs in Accounts Receivable are used primarily to remove amounts from a balance that are no longer considered collectible. This typically occurs when it is determined that a patient account is uncollectible, perhaps due to bankruptcy, inability to pay, or the expiration of the collection period. By writing off these amounts, a practice cleans its financial records, reflecting a more accurate representation of the amounts it expects to receive.

The process of removing uncollectible accounts helps maintain the integrity of the accounts receivable figure, ensuring that financial reports provide a realistic view of expected revenue. It is important for managing cash flow and determining the performance of the business regarding collections, but does not involve increasing billing revenue or tracking denied claims. Payments received and adjustments to accounts are accounted for in other ways and do not relate directly to the function of write-offs.