The invoice is months past due. You have called more than once, and the last call went to voicemail. Somebody wants it off the aging report before the quarter closes, and somebody has said the sentence that ends the conversation: just write it off.
That sentence smuggles two decisions into one, and they are not the same decision.
Writing an invoice off is an accounting decision. It does not release the debtor, it does not stop the limitations clock, and it does not make the money uncollectible. How you carry the balance and whether anyone works the file are separate questions with separate answers. The two get run together, and that is what costs money — a write-off feels like closure, and closure is what stops anyone from opening the file again.
So run them separately, in this order.
What a write-off does, and what it leaves alone
A write-off moves a receivable out of assets. Federal tax law allows a deduction for a business debt that goes bad: 26 U.S.C. § 166(a)(1) provides that “There shall be allowed as a deduction any debt which becomes worthless within the taxable year,” and § 166(a)(2) provides that when satisfied that a debt is recoverable only in part, the Secretary may allow it as a deduction in an amount not in excess of the part charged off within the taxable year. That treatment belongs to your CPA.
What the entry does not touch is the obligation. Nothing in Chapter 16 of the Texas Civil Practice and Remedies Code — the limitations chapter — ties a deadline to how a creditor carries a balance. The period runs from accrual, whatever your ledger says.
Notice the asymmetry. Your own records cannot move a deadline. Theirs can: § 16.065 provides that an acknowledgment of the justness of an apparently time-barred claim, made after the claim is due, is not admissible to defeat the law of limitations unless it is in writing and signed by the party to be charged. Something signed by them is evidence. Something recorded by you is bookkeeping.
Question one: how old is it, and which clock governs?
Most Texas commercial claims run four years. Tex. Civ. Prac. & Rem. Code § 16.004(a)(3) sets four years for suit on a debt, and § 16.004(c) applies the same four years to an action on an open or stated account, or on a mutual and current account concerning the trade of merchandise between merchants. Section 16.051 supplies a residual four-year period where no express period applies, other than recovery of real property.
The part that gets misread is accrual. For § 16.004(c) the statute is specific: “the cause of action accrues on the day that the dealings in which the parties were interested together cease.” Not the invoice date. Not the due date. The day the dealings ceased. On a customer you billed for years, that can be worth years of runway, and it is the first thing to establish.
One more provision before you call a claim stale. Section 16.063 provides that the absence from this state of a person against whom a cause of action may be maintained suspends the running of the applicable limitations period for the period of that absence. And if the debtor sits outside Texas, limitations periods vary by state, with the Texas picture in the commercial limitations reference.
Question two: does the debtor still exist, and does it still operate?
Two different facts. Both get assumed. Confirm each.
“Out of business” is sometimes just a status someone inferred from a disconnected phone. Pull the Secretary of State and Comptroller records before accepting it — a company that moved, rebranded, or rolled into a successor is a live file, and locating it is ordinary skip tracing and asset work.
If the entity was formally terminated, there is a window. Tex. Bus. Orgs. Code § 11.356(a) provides that a terminated filing entity “continues in existence until the third anniversary of the effective date of the entity’s termination” for limited purposes, including the survival of an existing claim against it. Section 11.359(a) is the hard edge: except as provided by Subsection (b), an existing claim against a terminated filing entity is extinguished unless an action is brought on it not later than the third anniversary of the date of termination.
Then the provision that is easiest to miss. Tex. Tax Code § 171.255(a):
each director or officer of the corporation is liable for each debt of the corporation that is created or incurred in this state after the date on which the report, tax, or penalty is due and before the corporate privileges are revived
Section 171.2515(b) applies that subchapter to forfeiture of a taxable entity’s right to transact business, which is how § 171.255 reaches entities other than corporations, and under § 171.255(d) reviving the charter does not affect liability already incurred. It is not automatic — § 171.255(c) gives a director or officer a defense on showing the debt was created over the director’s objection, or without the director’s knowledge where reasonable diligence would not have revealed the intention to create it. But it is a dated window, and your invoice either falls inside it or it does not. That is a records question with a definite answer, and one of the few facts that can turn a file that looked dead. The mechanics are in what to do when a Texas entity’s registration is forfeited.
Question three: is a short-fuse remedy about to expire?
This question outranks the rest and is the easiest to reach last, because some remedies run on a calendar measured in weeks. If your invoice is on a construction, oilfield, or public job, check these first.
- Texas mechanic’s lien. Under Tex. Prop. Code § 53.052(a)(1), an original contractor on a non-residential project files the lien affidavit not later than the 15th day of the fourth month after the month the work was completed, terminated, or abandoned — the third month for residential. A claimant other than an original contractor runs on its own deadlines, and on a non-residential project must send the notice of claim § 53.056(a-1)(1) requires by the 15th day of the third month after the month during which the labor or materials were provided. Section 53.158(a) then requires suit to foreclose not later than the first anniversary of the last day to file that affidavit, subject to the written extension § 53.158(a-2) allows.
- Mineral lien. Section 56.021(a) requires the affidavit not later than six months after the day the indebtedness accrues, and § 56.021(b) requires a mineral subcontractor to serve the property owner written notice not later than the 10th day before the affidavit is filed.
- Public payment bond claim. Tex. Gov’t Code § 2253.041(b) requires notice to the prime contractor and surety on or before the 15th day of the third month after each month in which the claimed labor or material was furnished.
A lien or bond deadline can pass in weeks while the limitations question still has years left on it. If one of those clocks is running, resolve it before deciding anything about the receivable. These are attorney filings, not agency work.
Question four: is the paperwork good enough to prove it?
Texas gives a well-kept account a procedural advantage. Tex. R. Civ. P. 185 provides that when an action is founded on an open account or other claim for goods, wares and merchandise, or for labor or materials furnished, on which a systematic record has been kept, and is supported by the sworn affidavit the rule describes, “the same shall be taken as prima facie evidence thereof, unless the party resisting such claim shall file a written denial, under oath.”
Two honest qualifications. The presumption is defeasible — Rule 93(10) requires a denial of the account founding the plaintiff’s action to be verified by affidavit, and a proper sworn denial puts you back to proving the account the ordinary way. And Rule 185 governs evidence, not a cause of action. The mechanics are in how a suit on sworn account works.
Pull it in date order: invoices with terms, the purchase order or work authorization, delivery or completion records, the payment history, and every written exchange about the balance. Without that package, nobody downstream can move.
Question five: was there a personal guarantee, or a credit application?
A signed guaranty turns one obligor into two. So does a credit application, which often carries the guaranty, a venue provision, a fee provision, and trade references that are themselves leads. It may sit in the sales office rather than accounting. Find it before you decide.
If you intend to put fees in a demand, read the chapter first. Tex. Civ. Prac. & Rem. Code § 38.001(b) lists rendered services, performed labor, furnished material, a sworn account, and an oral or written contract among qualifying claims, and § 38.002 adds conditions: an attorney, presentment, and no tender of the just amount owed before the 30th day after presentment. The detail is in attorney’s fees on an unpaid Texas invoice.
The two decisions, side by side
| Write it off | Place it | |
|---|---|---|
| What it is | An accounting and tax entry on your books | A decision to have someone work the file |
| Effect on the obligation | None. The debt survives the entry | The claim gets pursued |
| Effect on the clock | None. Limitations run from accrual | None. The deadline is the deadline |
| Decided by | Your CPA and the close calendar | The five questions above |
| Can you do both? | Yes — and on a file that answers well, you should | Yes |
The last row is the point. Nothing makes these choices exclusive.
When writing it off is the right answer
Sometimes the write-off is the whole answer, and an honest agency says so:
- The balance is smaller than the cost of handling it. Your time has a price.
- The debtor genuinely wound up, and nothing is reachable. No officer exposure inside a § 171.255 forfeiture window, no assets located, nobody on a guaranty, and the § 11.356 three-year window gone.
- The claim is past the applicable period under § 16.004, with no § 16.063 absence and no signed written acknowledgment of the kind § 16.065 contemplates.
- It is not a collection matter. A customer withholding over a real scope, quality, or backcharge disagreement has a dispute, not a delinquency, and the dispute is what is holding the money.
- You have decided the relationship is worth more than the invoice. Legitimate — just make it a decision somebody signed, not something that happened because nobody looked.
What does not belong on that list is “it feels too old” or “they stopped answering.” Those are reasons files get closed, and neither one is a fact.
What to do this week
Check lien and bond deadlines first; nothing outranks them. Pull the Secretary of State and Comptroller records — status, officers, and the dates of any forfeiture. Date the accrual, not the invoice. Assemble the systematic record, and find the credit application. Then make both decisions, separately: take the write-off if the tax treatment fits your year, and place the account if the questions came back that way. Treating the two as one is how recoverable balances quietly disappear.
ASA works commercial files on contingency — commercial bad debt recovery, B2B accounts, large-balance claims, accounts another agency returned as uncollectible through second placement, and escalation to legal collections through a network of licensed collection attorneys. The fee is agreed before you place anything. ASA is a collection agency, not a law firm: it does not file suit, file liens, or give legal advice, and the questions above are ones for counsel. On timing rather than merits, see when to send an account to collections — or send the file over for a read on it.
General information for commercial creditors, not legal advice. Laws and deadlines change and depend on the facts — confirm specifics with qualified counsel.