Bad Debt Write-Off 2026 [Complete Data]

Five cents of every dollar billed in US B2B trade during 2025 was never collected: it was written off as bad debt, not merely paid late, according to Atradius’s Payment Practices Barometer. That is a harder problem than the late payment statistics most invoicing data covers, because a written-off invoice is gone money, not slow money. This data study covers how much bad debt businesses write off, where it varies by country and industry, and what tax relief exists once an invoice crosses that line.

What percentage of B2B invoices become bad debt?

Atradius’s 2025 US Payment Practices Barometer found 52% of B2B invoice value paid on time, 43% overdue, and 5% written off as bad debt: the share of every billed dollar a business never sees.

Figure 1: Share of the total value of US B2B invoices written off as bad debt in 2025. Source: Atradius Payment Practices Barometer, US 2025.

How does the bad debt write-off rate vary by country?

The US figure sits in the middle of a three-country comparison Atradius ran for its North America report. Mexico wrote off the least at 4% of B2B invoice value, the US wrote off 5%, and Canada wrote off the most at 7%, all measured over the same 2025 survey period. Canada’s businesses also reported the lowest share of invoices paid on time of the three countries, at 49%, against 55% for Mexico and 52% for the US, a pattern consistent with a market where more invoice value ultimately falls through to write-off rather than just running late.

Financing choices differ by country too. US businesses leaned most heavily on bank loans (68% of respondents) and invoice financing (57%) to bridge working-capital gaps over the past 12 months, while Canadian businesses relied most on trade credit (50%) and bank loans (46%). Across all three countries, most companies said they use a blended approach to customer payment risk, combining internal credit provisioning with outsourced tools such as trade credit insurance, rather than relying on either one alone.

Figure 2: Share of total B2B invoice value written off as bad debt, by country, 2025. Source: Atradius Payment Practices Barometer, North America 2025.

Why do B2B customers become bad debt in the first place?

Bad debt rarely starts as bad debt. It starts as a late payment with a reason attached, and most of those reasons trace back to the customer’s own situation rather than a dispute over the invoice itself. Among US B2B suppliers surveyed by Atradius, 45% named the customer’s own liquidity issues as a top reason their invoices were paid late, well ahead of delays in the customer’s internal payment process (33%), supply chain disruptions (26%), and invoice disputes (23%). A liquidity problem that does not resolve is exactly the kind of late payment most likely to eventually become uncollectable, since the customer’s ability to pay, not just their willingness, is the underlying issue.

Canadian suppliers ranked the same four reasons in a different order: delays in the customer’s payment process led at 31%, ahead of the customer’s own liquidity issues (30%), invoice disputes (26%), and supply chain disruptions (20%). The reordering matters for how a business responds. A process delay is often fixable with a clearer invoice and a firmer reminder cadence, while a liquidity problem usually is not, which is part of why Canada’s 7% bad debt write-off rate runs higher than the US figure even though its overdue rate, 44%, is close to the US’s 43%.

Figure 3: Top reasons US B2B customers cited for paying invoices late, 2025 (multiple response). Source: Atradius Payment Practices Barometer, US 2025.

Which industries write off the most bad debt?

Atradius’s US report broke out write-off rates for several industries, and the spread is wider than the 5% national average suggests. Electronics and ICT companies wrote off 6% of long-overdue invoice value as bad debt in 2025, the highest of the industries surveyed, alongside average payment terms of 50 days from invoicing and a 44% overdue rate. Agri-food matched the national average at 5%, with 40% of invoices overdue at any point. Energy and fuel wrote off the least, at 3%, despite a similarly high 44% overdue rate, suggesting energy sector customers who fall behind are more likely to eventually pay than customers in electronics and ICT.

The same pattern shows up in Canada’s industry data. The Canadian transport sector wrote off 4% of B2B invoice value as bad debt against a 38% overdue rate, and Canadian agri-food wrote off 4% against a 43% overdue rate, both lower write-off rates than their overdue rates alone would suggest. The gap between an industry’s overdue rate and its eventual write-off rate is a rough proxy for how collectable that industry’s slow payers actually are once a business starts chasing them.

Figure 4: US bad debt write-off rate by industry, share of long-overdue invoice value, 2025. Source: Atradius Payment Practices Barometer, US 2025.

How does an invoice actually become bad debt?

There is no single universal day-count that turns a late invoice into bad debt; it is a judgment call a business makes once collection stops being realistic, not an automatic status change. What does change the picture is time: the longer an invoice sits unpaid, the more collection effort it typically takes relative to what it recovers, and at some point a business decides further chasing costs more than the invoice is worth. That decision is also a formal one for tax and GST purposes in most jurisdictions, which is why “write-off” has a specific meaning beyond just giving up on a phone call.

That is also why most B2B suppliers do not rely on chasing debt alone. Around 60% of US businesses surveyed by Atradius said they use a blended approach to customer payment risk, combining internal credit provisioning with an outsourced tool like trade credit insurance, rather than absorbing the full risk of a slow-paying customer themselves. The earlier a business intervenes with clear terms and consistent reminders, the fewer invoices reach the point where that formal write-off decision has to be made at all.

Figure 5: The path from an issued invoice to a formal bad debt write-off. Source: Atradius Payment Practices Barometer, US 2025 (write-off share).

Can a business recover any tax on a bad debt write-off?

Writing off a bad debt is not purely a loss; both the US and Australian tax systems provide a mechanism to recover part of it, though the rules differ. In the US, the IRS permits an accrual-method business to deduct a debt that becomes wholly or partially worthless as an ordinary business expense, per IRS Topic No. 453, but only for an amount the business had previously included in income, and only once the business can show reasonable steps were taken to collect it; a debt is considered worthless when the facts and circumstances show no reasonable expectation of repayment. In Australia, a GST-registered business accounting for GST on an accruals basis can claim a decreasing GST adjustment in the tax period it formally writes off a bad debt, recovering the GST it already remitted to the ATO on that invoice, according to the ATO’s guidance on deductions for unrecoverable income. That GST relief specifically does not apply to businesses accounting for GST on a cash basis, since a cash-basis business never remitted GST on the unpaid amount in the first place.

Bad Debt Write-Off at a Glance

Country	Paid on time	Overdue	Written off as bad debt
Mexico	55%	41%	4%
United States	52%	43%	5%
Canada	49%	44%	7%

Table 1: Share of total B2B invoice value by payment status, 2025. Source: Atradius Payment Practices Barometer, North America 2025.

The Bottom Line

Bad debt is the part of the late-payment problem that never resolves: 5% of US B2B invoice value in 2025 was not slow, it was gone, and the rate runs higher still in Canada and in industries like electronics and ICT. The reasons trace mostly to the customer’s own liquidity, which is exactly the kind of late payment a business has the least leverage to fix after the fact. The more practical lever sits earlier in the process, before an invoice has a chance to age into that 5%: faster, clearer collection from day one. BillyPaid’s payment reminders automate that cadence on every invoice, so a slow payer gets a structured nudge long before a business has to make the harder call of writing the invoice off.

Frequently Asked Questions

What percentage of B2B invoices become bad debt? In the United States, 5% of the total value of B2B invoices was written off as bad debt in 2025, according to Atradius’s Payment Practices Barometer. Canada’s rate was higher at 7%, while Mexico’s was lower at 4%, per the same survey’s North America report.

Why do B2B invoices end up as bad debt instead of just being late? The top reason US B2B customers cited for paying late was their own liquidity issues, named by 45% of survey respondents, followed by delays in the payer’s internal payment process (33%), supply chain disruptions (26%), and invoice disputes (23%), per Atradius’s 2025 US Payment Practices Barometer. An invoice becomes bad debt when a business concludes there is no reasonable expectation the underlying reason will resolve.

Which industries write off the most bad debt? Among the industries Atradius surveyed in the US for 2025, electronics and ICT had the highest bad debt write-off rate at 6% of long-overdue invoice value, against a 5% all-industry average. Energy and fuel wrote off the least, at 3%, despite carrying a higher overdue rate on paper.

Can a business get its tax back on an invoice it writes off as bad debt? In the US, the IRS allows an accrual-method business to deduct a debt that becomes wholly or partially worthless as an ordinary business expense, provided the amount was previously included in income, per IRS Topic No. 453. In Australia, a business registered for GST on an accruals basis can claim a GST adjustment to recover the GST already remitted on a bad debt once it is formally written off, per the ATO’s bad debt guidance, but this relief does not apply to businesses accounting for GST on a cash basis.

Sources and References

1. Atradius, Payment Practices Barometer, US (2025), US paid-on-time/overdue/bad-debt split, late-payment reasons, and industry write-off rates.
2. Atradius, Payment Practices Barometer, North America (2025), Canada and Mexico paid-on-time/overdue/bad-debt figures.
3. Internal Revenue Service, Topic No. 453, Bad Debt Deduction, US business bad debt deduction requirements.
4. Australian Taxation Office, Deductions for Unrecoverable Income (Bad Debts), GST adjustment rules for written-off bad debts.

Note: All figures verified as of September 2026.