How Can Write-Offs Be Better Managed?
If there’s one number that reliably sparks debate in our benchmarking reports each year, it’s write-offs. A write-off is simply the portion of recorded time or fees that a firm can’t bill — but the impact on profitability is anything but simple.
Some years we see encouraging improvement across regions; other years, the spread between firms is so wide it raises the bigger question: why are some practices managing write-offs well while others are struggling with double-digit losses?
For many firms, write-offs are the quiet leak in the system — small enough to ignore in isolation, but significant when viewed across a full financial year.
Understanding the Real Problem Behind Write-Offs
Write-offs are rarely caused by one factor. They’re a combination of how time is recorded, how work is delegated, the timing of billing, the firm’s confidence in charging appropriately, and the internal culture around “just writing it off to keep the peace”.
Some firms who have moved to fixed fees or value pricing will confidently say they no longer experience write-offs at all. But as one practitioner once put it to me, “If you’re not recording time, how on earth would you know?”
And there’s the rub: you can’t improve what you don’t measure.
Before diving into solutions, firms first need a realistic foundation: accurate time recording, honest job budgets, timely billing, and a willingness to look squarely at the numbers without emotion. Once that’s in place, patterns become obvious — and so do the opportunities for improvement.
Is It Pricing, Process, or People?
Often It’s a Little of Each.
For firms with write-offs hovering around 15% or even 20%+, the causes usually fall into a few recurring categories:
1. Charge Rates vs. Market Reality
Are your charge rates competitive and realistic? Charging below market doesn’t make you “better value”; it generally just means you carry the cost through write-offs.
If your realised rates are consistently below your charge-out rates, that’s a signal something needs to shift — pricing, efficiency, or both.
2. Typical Fees Compared to Peers
Some firms simply aren’t charging enough for the work they’re doing.
When we benchmark service fees across similar firms, we often see gaps that explain write-offs long before we look at workflow or delegation.
3. Seniority of Staff Completing the Work
This is a big one.
Partners or managers who step in to “fix” work or “do it quicker” inevitably blow job budgets, even with the best of intentions.
Many firms underestimate how much write-off is generated simply by the wrong people doing the wrong tasks.
-
June 2026 Charge Rates & Salaries Survey
Price range: $495 through $1,265 incl. GST This product has multiple variants. The options may be chosen on the product page
4. Delegation (or lack of it)
We see firms with highly capable juniors who are barely utilised, while senior staff are flat out — and writing off hours that never should have been theirs to do.
Appropriate, confident delegation is not only a staffing issue; it’s a profit issue.
5. Efficiency and Cost Structures
Cloud platforms and updated workflows have made huge differences for many firms. Yet non-cloud clients still create more manual work.
Increasingly, firms are using dual pricing: one rate for cloud clients, another for those who choose not to move.
It’s not a penalty — it’s simply reflecting the true cost of service.
Some firms are also outsourcing certain tasks where it makes economic sense. While outsourcing often raises debate, the firms who do it well — with clear processes and quality controls — do see improvements in productivity and reduced write-offs.
If Write-Offs Persist, What Is the Firm Actually Telling You?
Write-offs are a symptom, not a standalone problem. They usually point to one of three underlying issues:
Efficiency needs to improve
Pricing needs to increase
The firm is absorbing costs that belong in the client fee
In short: if you cannot recover a reasonable return on the work, either something in your process is wrong, or you’re undercharging for the service delivered.
Want to know more? Book a 15-minute call with Michelle Knights and discover how she can help your practice.
Benchmarking Helps Bring the Real Picture Into Focus
One reason firms struggle with write-offs is that they only look inward.
Benchmarking lets you compare your performance with peers of similar size and service mix, making the numbers meaningful rather than abstract.
You can see:
Whether your write-offs are normal for your region
How your charge-out rates compare
Whether your fee structures are in line with similar firms
How staffing levels and productivity match up
Armed with that context, firms can make practical, confident decisions rather than relying on assumptions — and improvements tend to follow quickly once the causes are identified.
Useful Products for Your Practice
-
Typical Fees for Common Services Report
Price range: $198 through $396 incl. GST This product has multiple variants. The options may be chosen on the product page -
DIY Practice Listing
$330 incl. GST -
Sell or Buy a Practice Without a Broker – Complete Toolkit
$995 incl. GST
The Bottom Line
Write-offs aren’t the enemy. Ignoring them is.
The firms that manage write-offs well aren’t necessarily the ones with perfect systems — they’re the ones who have clear visibility, realistic pricing, and the discipline to match the right people to the right jobs.
If your firm is struggling to reduce write-offs or isn’t sure whether your numbers are “good” or “concerning”, benchmarking provides the clarity you need.
Once you know where the pressure points are, improving profitability becomes far more achievable.
Frequently Asked Questions
Write-offs usually occur when the time spent on a job exceeds what can reasonably be billed, often due to inaccurate time recording, underquoting, or inefficient workflows. They can also stem from senior staff completing tasks that should have been delegated, which inflates job costs and reduces profitability.
Fixed-fee models don’t automatically remove write-offs; they simply make them harder to detect if time isn’t tracked. Without visibility over the actual cost of completing work, firms may unknowingly undercharge, resulting in hidden write-offs and reduced margins.
Firms can reduce write-offs by ensuring their pricing reflects the true cost of service delivery, including the complexity of the work and the experience level of staff involved. Regularly reviewing charge-out rates and comparing fees with peer firms helps identify whether pricing is contributing to unnecessary write-offs.
Delegation plays a significant role in write-off management because assigning work to staff with appropriate skill levels helps protect job budgets. When senior staff perform tasks better suited to juniors, the cost of the job increases, and firms often absorb the difference as a write-off.
Cloud accounting software, workflow tools, and automated data-sharing with clients can streamline processes and reduce manual handling, which lowers the time spent on each job. When used well, technology supports more efficient job completion and makes it easier to maintain billing accuracy.
Benchmarking gives firms context by comparing their write-offs with similar practices in their region or size band. This helps identify whether the issue lies in pricing, staffing, efficiency, or process management, and provides clearer direction on what to improve.
Many firms now do, because non-cloud clients typically require more manual work, leading to higher time costs and potential write-offs. Differential pricing ensures the firm recoups the true cost of service delivery and encourages clients to adopt more efficient systems.
The free monthly newsletter the industry waits for.
Sign up for our essential MAP Memo newsletter to stay updated on upcoming speaking engagements and events.
Each month you’ll receive:
- News of current trends and industry insights from Michelle Knights
- Crucial insights from our reports and presentations
- Calendar of events
